ExpertEasy2 marksMultiple Choice
ACCA · Question 28 · Syllabus F: Professional ethics
Section A
SkyFly, a struggling regional airline, is undergoing its statutory audit. The airline's CEO tells the audit manager, 'If you don't sign off on these aggressive capitalization of maintenance costs, we will go bankrupt, and I will personally ensure your firm never gets another client in the aviation sector.' What type of ethical threat is the audit manager facing?
Section A
SkyFly, a struggling regional airline, is undergoing its statutory audit. The airline's CEO tells the audit manager, 'If you don't sign off on these aggressive capitalization of maintenance costs, we will go bankrupt, and I will personally ensure your firm never gets another client in the aviation sector.' What type of ethical threat is the audit manager facing?
Answer options:
A.
Advocacy threat
B.
Intimidation threat
C.
Self-interest threat
D.
Familiarity threat
How to approach this question
Look at the CEO's behavior: making threats to ruin the audit firm's reputation if they don't comply. This is a textbook intimidation threat.
Full Answer
B.Intimidation threat✓ Correct
An intimidation threat occurs when a professional accountant is deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the accountant. The CEO's threat to blacklist the firm in the aviation sector is a clear attempt to intimidate the auditor into accepting inappropriate accounting treatments.
Common mistakes
Categorizing this as a self-interest threat because of the potential loss of revenue. The *mechanism* of the pressure is intimidation.
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