ACCA AAA Practice Questions - ACCA Advanced Audit And Assurance (AAA) Exam

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An audit firm has been approached by a company to provide both the statutory audit and the bookkeeping/financial statement preparation service for the same listed entity. Under the IESBA Code of Ethics, which threat is most directly created and why is this prohibited for a public interest entity (PIE)?

Self-review threat, because the firm would later audit financial statements it had prepared Intimidation threat, because management could pressure the audit team Familiarity threat, because long association builds trust Advocacy threat, because the firm promotes the client's position

Correct Answer:

Self-review threat, because the firm would later audit financial statements it had prepared

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