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ACCA · Question 52 · Professional ethics

SECTION B - SCENARIO 6 (Syllabus F)

'QuantumAudit' is an audit firm dealing with a highly lucrative client, 'SynBio'.
Task 1: SynBio makes up 40% of QuantumAudit's total annual revenue.
Task 2: The lead audit partner has been auditing SynBio for 12 consecutive years and plays golf with their CEO weekly.
Task 3: Because of the golf relationship, the audit partner ignores a glaring error in SynBio's inventory valuation.
Task 4: To fix the issue, QuantumAudit decides to rotate the lead audit partner off the SynBio account.

Which of the following correctly identifies the ethical concepts in Tasks 1 to 4?

Answer options:

A.

1: Intimidation threat, 2: Self-review threat, 3: Breach of Confidentiality, 4: Safeguard created by legislation

B.

1: Self-interest threat (Fee dependency), 2: Familiarity threat, 3: Breach of Objectivity, 4: Safeguard in the work environment

C.

1: Self-interest threat, 2: Familiarity threat, 3: Breach of Integrity, 4: Safeguard created by the profession

D.

1: Advocacy threat, 2: Intimidation threat, 3: Breach of Objectivity, 4: Safeguard in the work environment

How to approach this question

Task 1: High fees = Self-interest. Task 2: Long relationship = Familiarity. Task 3: Bias = Breach of Objectivity. Task 4: Firm policy = Work environment safeguard.

Full Answer

B.1: Self-interest threat (Fee dependency), 2: Familiarity threat, 3: Breach of Objectivity, 4: Safeguard in the work environment✓ Correct
Task 1: Heavy fee dependency creates a Self-interest threat. Task 2: Long tenure and close personal relationships create a Familiarity threat. Task 3: Allowing bias (the friendship) to override professional judgment is a breach of Objectivity. Task 4: Rotating partners is an internal firm policy, making it a safeguard in the work environment.

Common mistakes

Confusing the source of the safeguard (profession vs. work environment). Partner rotation is implemented by the firm.
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