ExpertHard1 markMultiple Choice
CPA · Question 57 · Area I: Ethics & General Principles
Which of the following scenarios represents a 'self-interest threat' under the AICPA Code of Professional Conduct?
Which of the following scenarios represents a 'self-interest threat' under the AICPA Code of Professional Conduct?
Answer options:
A.
The auditor promotes the client's securities in an IPO.
B.
The auditor relies on the client for 25% of the firm's total revenue.
C.
The auditor takes on the role of management.
D.
The auditor audits their own work.
How to approach this question
Match the scenario to the 7 Threats (Self-Review, Advocacy, Adverse Interest, Familiarity, Undue Influence, Financial Self-Interest, Management Participation).
Full Answer
B.The auditor relies on the client for 25% of the firm's total revenue.✓ Correct
A self-interest threat exists when the member could benefit, financially or otherwise, from an interest in, or relationship with, a client. Relying heavily on a single client for fees creates a financial self-interest that might compromise objectivity.
Common mistakes
Confusing Advocacy (promoting) with Self-Interest (benefiting).
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