Section B (Syllabus F)

Scenario: Marcus is an audit manager at a mid-tier accounting firm, currently auditing 'Apex Holdings'. During the audit, Marcus discovers a complex web of undisclosed related-party transactions between Apex Holdings and a private offshore company owned by Apex's CEO. When Marcus raises this, the CEO threatens to cancel the audit contract and publicly ruin Marcus's professional reputation. Marcus's own firm partner tells him to 'just drop it' because Apex is their most lucrative client.

Based on the scenario and your knowledge of professional ethics (Syllabus F), select the FOUR correct statements.

The CEO's threat to ruin Marcus's reputation is a clear example of an Intimidation threat.

The audit partner's instruction to 'drop it' because Apex is a lucrative client represents a Self-interest threat for the audit firm.

If Marcus complies and ignores the undisclosed transactions, he will be in direct breach of the fundamental principle of Objectivity.

If Marcus complies, he will also breach the principle of Integrity by being associated with financial statements that omit required disclosures.

Marcus should resolve this by applying an Advocacy threat safeguard, such as promoting the CEO's offshore company.

The principle of Confidentiality prevents Marcus from reporting this issue to his firm's internal ethics committee.