▪ 2 Ethical threats (K1)

The five categories of threats as per the ACCA Code of Ethics and Conduct along with an example of each threat are:

• Self-interest: The risk that a financial or other interest in a client will inappropriately influence the professional accountant's judgement or behaviour

• Self-review: This arises where a professional accountant from the audit firm performs work for the client and this work must later be reviewed by the same person, or another professional accountant from the same firm, in order to arrive at a judgement on the subject matter

• Advocacy: The risk that a professional accountant promotes a client's position to the point that the professional accountant's objectivity is compromised

• Familiarity: The risk that due to a long or close relationship with a client, the professional accountant could be too sympathetic to their interests or too accepting of their work

• Intimidation: The risk that the professional accountant is deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the professional accountant

Before accepting clients, auditors must assess any ethical threats and either put in place measures to mitigate the threats (safeguards) or reject the appointment.

Auditors must be continually aware that new threats that may arise during the course of their work and if appropriate safeguards cannot be put in place to mitigate these threats, they may need to consider resigning from the engagement.