ACCA F8 - Audit and Assurance Revision Kit 2016

Marking scheme
(a)
(b)
(c)
1/2 mark for each threat and 1/2 per example of a threat
– Self-interest
– Self-review
– Advocacy
– Familiarity
– Intimidation
Marks
Up to 1 mark per ethical threat and up to 1 mark per managing
Method
– Staff discount
– Secondment
– Total fee income
– Finance director and partner good friends
– Outstanding fees
Threats – Max 5
Methods – Max 5 10
Up to 1 mark per step
– Compliance with ACCA's Code of Ethics and Conduct
– Competent
– Write outgoing auditor
– Permission to contact old auditor
– Old auditor permission to respond
– Review response
– Client screening procedures
5
5
20
(a)
Ethical threats and examples
Compliance with the fundamental principles of professional ethics may potentially be threatened by a wide
range of different circumstances. These threats generally fall into five categories:
Self-interest
Self-review
Advocacy
Familiarity
Intimidation
An example of a circumstance that may create each threat is given in the table below.
Threat category
Self interest
Self Review
Advocacy
Familiarity
Intimidation
Example
A financial interest in a client's affairs where an audit firm owns shares in the
client
A firm prepares accounting records and financial statements and then audits
them
Acting as an advocate on behalf of an assurance client in litigation
Senior members of staff at an audit firm with a long association with a client.
Client threatens to sue the audit firm for previous work
66 Answers