Syllabus F: Professional ethics

A management accountant is pressured by the CEO to backdate a large sales invoice to the previous financial year to ensure the company hits its bonus targets. If the accountant complies, which fundamental IFAC ethical principle is most directly breached?

An audit partner is assigned to lead the external audit of a large retail chain. The partner's spouse has recently been appointed as the Chief Financial Officer (CFO) of that same retail chain. Which structural threat to independence does this situation create?

An accounting firm is acting as the external auditor for a tech startup. The startup is looking for investors, and the audit partner agrees to speak at a roadshow to actively promote the startup's shares to potential venture capitalists. Which ethical threat does this action create?

An accountant is considering disclosing confidential client information. Under the IFAC Code of Ethics, in which TWO of the following situations is an accountant permitted or required to disclose confidential information? (Select TWO)

Which TWO of the following scenarios represent a 'Self-review threat' according to the IFAC Code of Ethics? (Select TWO)

Which fundamental IFAC ethical principle requires an accountant to not allow bias, conflict of interest, or undue influence of others to override professional or business judgments? (Type the single word principle)

If a client threatens to sue their audit firm if the firm does not issue a clean audit report, what specific type of ethical threat is created? (Type the single word threat type)

SCENARIO: 'AuditPro LLP' is facing several ethical dilemmas. Partner A is asked to audit a complex financial valuation that Partner A's own firm prepared last month. Partner B has been the lead audit partner for the same client for 15 years and goes on holiday with the client's CEO. Partner C is caught using confidential client data to buy shares before a public announcement. To fix Partner B's issue, the firm decides to replace Partner B with a new lead partner. Identify the correct ethical terms: 1. The threat created by Partner A's situation. 2. The threat created by Partner B's 15-year tenure. 3. The fundamental principle breached by Partner C. 4. The type of action taken to fix Partner B's issue. Which option represents the correct combination?

[Section A] A senior auditor has been assigned to lead the external audit of 'AgriGrow Ltd'. Prior to joining the audit firm three months ago, this same individual was the Financial Controller at AgriGrow Ltd, where they designed the company's current internal control systems. According to the IFAC code of ethics, which structural threat is MOST prominent in this scenario?

[Section A] An audit partner has been in charge of the external audit for a major retail client for the past 12 years. Over this time, the partner has developed a close personal friendship with the client's CEO, frequently playing golf together and attending each other's family weddings. Which IFAC structural threat is most likely to compromise the auditor's objectivity?

[Section A] An accountant discovers that their employer is deliberately falsifying tax returns to evade corporate taxes. The accountant refuses to be associated with the fraudulent returns and reports the matter to the appropriate regulatory authorities. Which IFAC fundamental principle is the accountant primarily upholding by refusing to be associated with false information?

[Section A] An audit firm is asked by its client to help promote the client's upcoming Initial Public Offering (IPO) by speaking at investor roadshows and endorsing the financial health of the company. If the audit firm agrees, which ethical threat will be created?

[Section A] During an external audit, the Finance Director of the client company aggressively tells the Audit Manager: 'If you don't sign off on this aggressive revenue recognition policy, we will put the audit contract out to tender next year and ensure your firm loses our business.' Which IFAC ethical threat does this represent?

[Section A] Which IFAC fundamental principle requires an accountant not to compromise their professional or business judgment because of bias, conflict of interest, or the undue influence of others?

[Section A] True or False: Under the IFAC code of ethics, the principle of Confidentiality is absolute and an accountant can NEVER disclose client information to a third party under any circumstances.

[Section B - MTQ] SCENARIO: An audit firm is auditing 'BuildCorp'. The Audit Partner, David, has been best friends with BuildCorp's CEO since university. During the audit, a junior auditor discovers that BuildCorp has been deliberately hiding cash revenues to evade taxes. The CEO privately offers David a lucrative consulting contract if the audit firm ignores the tax evasion. Select the FOUR correct statements regarding the ethical threats and required actions.

Section A EcoCorp's Chief Financial Officer, an ACCA member, is finalizing the annual sustainability report. The CEO asks the CFO to remove a section detailing a recent toxic spill, arguing that it will hurt the stock price and that the spill was 'mostly cleaned up anyway'. If the CFO complies and signs off on the altered report, which IFAC fundamental principle is most directly breached?

Section A AuditPro has been assigned to audit a new client, a fast-growing tech firm. The lead audit partner discovers that the tech firm's newly appointed Financial Controller is his former university roommate and best friend of 20 years. Which structural threat to independence does this situation create?

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 At a highly public TechTalk industry conference, a senior accountant from a consulting firm is having drinks at the hotel bar. He loudly tells a colleague a 'funny story' about how their client, a major smartphone manufacturer, accidentally ordered 10 million defective batteries, a fact not yet known to the public or shareholders. Which fundamental ethical principle has been breached?

Section A LendAI uses algorithmic models to determine loan eligibility. The lead data scientist, an ACCA member, notices that the algorithm systematically denies loans to applicants from specific postal codes, regardless of their actual credit score. Management tells her to ignore it because the model is highly profitable. If she ignores the bias, which fundamental principle is most at risk?

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 A sole practitioner accountant is offered a highly lucrative contract to audit a complex cryptocurrency exchange. The accountant has no prior experience with blockchain technology or crypto-asset valuation. Under the IFAC code, what should the accountant do?

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.

An accountant at AuditGlobal discovers that a client has deliberately omitted a significant liability from their financial statements to secure a bank loan. The accountant refuses to sign off on the accounts and informs the client that the statements must be corrected. Which IFAC fundamental principle is the accountant primarily upholding by refusing to be associated with misleading information?

ChemWorks, a heavy manufacturing firm, hired an accounting firm to design and implement a new inventory valuation software system. Six months later, ChemWorks hires the exact same accounting firm to conduct their annual statutory external audit, which includes auditing the inventory valuations produced by the new software. Which structural threat to independence does this situation create?

An auditor working for CyberSec discovers that their client is actively engaged in funding terrorism. The auditor immediately reports this to the national anti-terrorism police unit, without informing the client or seeking their permission. Has the auditor breached the IFAC principle of Confidentiality?

LegalAdvise is an accounting and consulting firm. One of their partners is acting as an expert witness in a court case on behalf of an audit client, aggressively arguing that the client's tax avoidance scheme is entirely legal and ethical. Which ethical threat does this behavior primarily create regarding the firm's audit independence?

The lead audit partner for CharityTrust NGO has been managing the audit for the past 12 years. Over time, he has become close friends with the NGO's CEO, frequently playing golf together and attending each other's family weddings. Which ethical threat is most prominent in this scenario?

Which of the following is a clear example of an 'Intimidation threat' under the IFAC code of ethics?

True or False: The IFAC principle of 'Professional Competence and Due Care' requires accountants to maintain their professional knowledge and skill at the level required to ensure clients receive competent service.

Scenario: AuditPro staff must not allow bias to override professional judgment. They are currently auditing financial statements they prepared themselves. One auditor was offered a highly lucrative job by the client. The firm strictly enforces respecting the secrecy of client information. Identify the correct classifications for the following four tasks: Task 1: IFAC Principle regarding bias Task 2: Threat created by auditing own work Task 3: Threat created by the job offer Task 4: IFAC Principle regarding secrecy Which of the following combinations is correct?