ExpertMedium2 marksMultiple Choice
ACCA · Question 28 · Syllabus F: Professional ethics
An accounting firm is acting as the external auditor for a tech startup. The startup is looking for investors, and the audit partner agrees to speak at a roadshow to actively promote the startup's shares to potential venture capitalists. Which ethical threat does this action create?
An accounting firm is acting as the external auditor for a tech startup. The startup is looking for investors, and the audit partner agrees to speak at a roadshow to actively promote the startup's shares to potential venture capitalists. Which ethical threat does this action create?
Answer options:
A.
Self-interest threat
B.
Self-review threat
C.
Advocacy threat
D.
Familiarity threat
How to approach this question
Identify the action: 'promoting the client's shares'. Match this to the threat of acting as an advocate.
Full Answer
C.Advocacy threat✓ Correct
An advocacy threat occurs when a professional accountant promotes a client's or employer's position to the point that their objectivity is compromised. Selling, underwriting, or promoting a client's shares is a severe advocacy threat.
Common mistakes
Confusing it with self-interest. Advocacy is the specific threat generated by representing or promoting the client to third parties.
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