ExpertEasy2 marksMultiple Choice
ACCA · Question 27 · Syllabus F: Professional ethics
An audit partner is assigned to lead the external audit of a large retail chain. The partner's spouse has recently been appointed as the Chief Financial Officer (CFO) of that same retail chain. Which structural threat to independence does this situation create?
An audit partner is assigned to lead the external audit of a large retail chain. The partner's spouse has recently been appointed as the Chief Financial Officer (CFO) of that same retail chain. Which structural threat to independence does this situation create?
Answer options:
A.
Self-review threat
B.
Advocacy threat
C.
Familiarity threat
D.
Intimidation threat
How to approach this question
Identify the relationship between the auditor and the client. Close family ties lead to a specific threat.
Full Answer
C.Familiarity threat✓ Correct
A familiarity threat occurs when, due to a long or close relationship with a client or employer, a professional accountant becomes too sympathetic to their interests or too accepting of their work. A spouse being the CFO is a textbook example.
Common mistakes
Assuming it's a self-interest threat because of shared household income. While true, the primary and most direct threat defined by IFAC for close family relationships is Familiarity.
Practice the full ACCA BT — Business & Technology Practice Exam 1
52 questions · hints · full answers · grading
More questions from this exam
Q01A highly vocal but underfunded local community group is actively opposing the construction of a n...MediumQ02CloudNet Inc., a global data storage provider, is forced to restructure its server network due to...MediumQ03BioCure Ltd manufactures a highly specialized, patented drug for a rare genetic disorder. There a...EasyQ04In the context of Porter's Five Forces, which of the following scenarios best illustrates a high ...MediumQ05AgriGrow is an organization owned entirely by the farmers who supply it with raw wheat. The organ...Easy