ExpertEasy1 markMultiple Choice
ACCA · Question 45 · Syllabus F: Professional ethics
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?
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:
A.
Advocacy threat
B.
Self-review threat
C.
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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