CIMA BA4 · Chapter 3 · Question 9 of 10
A member's employer offers him a luxury holiday 'as thanks' just before he finalises a valuation that will determine the employer's loan covenant compliance. After evaluating the threat as significant, which response is most appropriate?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Decline the offer, because the threat to objectivity cannot be reduced to an acceptable level while it is accepted
Explanation
A valuable gift timed to coincide with a key judgement creates a self-interest threat to objectivity, and the Code's guidance on inducements says that an offer made with the intent of improperly influencing behaviour should be declined. Where the threat cannot be eliminated or reduced to an acceptable level, the member should not accept. Disclosure alone does not remove the influence, gifts from an employer can create threats just like gifts from anyone else, and quietly passing the work to a colleague without explanation is not a transparent safeguard.
More Threats to the fundamental principles and safeguards MCQs
- Q1Which of the following is NOT one of the categories of threat to compliance with the fundamental principles identified in the CIMA Code of…
- Q2A management accountant's annual bonus depends on the profit figure that she herself calculates. Which type of threat does this create?
- Q3A finance director tells a junior accountant that he will be dismissed unless he agrees to a particular accounting treatment. Which threat…
- Q4An accountant is asked to evaluate the effectiveness of a costing system that she designed and implemented last year. Which threat arises?
- Q5A management accountant is asked to speak publicly in support of her employer's position in a dispute with a regulator. Which threat is…