Section A

An accounting firm designs and implements a new inventory valuation system for a client. The following year, the same firm is hired to conduct the statutory audit of that client. Which ethical threat is most prominent here?

Answer options:

Advocacy threat

Self-review threat

Intimidation threat

How to approach this question

Identify that the firm is checking its own previous work. This is the definition of a self-review threat.

Full Answer

B.Self-review threat✓ Correct

A self-review threat occurs when a professional accountant is required to evaluate the results of a previous judgment made, or service performed, by themselves or by another individual within their firm. Auditing a system you built is a classic self-review threat.

Common mistakes

Confusing self-review with self-interest. While they want to keep the client (interest), the specific structural threat of auditing their own system is self-review.

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Practice the full ACCA BT — Business & Technology Practice Exam 4

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