Question 1

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?

Accepted Answer

Identify the relationship between the auditor and the client. Close family ties lead to a specific threat.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

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.

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?

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