ACCA BT · Chapter 14 · Question 5 of 11
An accountant holds a large number of shares in a client company whose financial statements she is reviewing. Which type of threat to her fundamental principles does this create?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Self-interest threat
Explanation
A self-interest threat arises where a financial or other interest could inappropriately influence judgement or behaviour; holding shares in the client gives the accountant a personal stake in the reported results. Self-review threats arise from evaluating one's own previous work, advocacy threats from promoting a client's position, and familiarity threats from close relationships.
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