ExpertEasy2 marksMultiple Choice
ACCA · Question 30 · Syllabus F: Professional ethics
[Section A] During an external audit, the Finance Director of the client company aggressively tells the Audit Manager: 'If you don't sign off on this aggressive revenue recognition policy, we will put the audit contract out to tender next year and ensure your firm loses our business.' Which IFAC ethical threat does this represent?
[Section A] During an external audit, the Finance Director of the client company aggressively tells the Audit Manager: 'If you don't sign off on this aggressive revenue recognition policy, we will put the audit contract out to tender next year and ensure your firm loses our business.' Which IFAC ethical threat does this represent?
Answer options:
A.
Self-interest threat
B.
Advocacy threat
C.
Intimidation threat
D.
Familiarity threat
How to approach this question
Recognize the aggressive, threatening behavior aimed at forcing the auditor to compromise their objectivity.
Full Answer
C.Intimidation threat✓ Correct
An intimidation threat occurs when an auditor is deterred from acting objectively by threats, actual or perceived. Threatening to replace the audit firm over a disagreement on accounting policies is a classic example of an intimidation threat.
Common mistakes
Selecting Self-interest. While the fear of losing fees is a self-interest issue, the explicit, aggressive threat from the client categorizes this primarily as Intimidation.
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