ExpertMedium2 marksMultiple Choice
ACCA · Question 29 · Syllabus F: Professional ethics
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?
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?
Answer options:
A.
Intimidation threat
B.
Advocacy threat
C.
Self-review threat
D.
Familiarity threat
How to approach this question
Identify the action: the partner is 'aggressively arguing on behalf of' the client. This is the definition of advocacy.
Full Answer
B.Advocacy threat✓ Correct
An advocacy threat occurs when a professional accountant promotes a client's position to the point that subsequent objectivity is compromised. Acting as an expert witness or promoting shares in a client are classic examples of advocacy threats.
Common mistakes
Confusing Advocacy with Self-interest. While the firm wants to win the case, the specific threat to independence caused by defending the client is Advocacy.
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