ICAEW ARF · Chapter 10 · Question 7 of 12
An audit manager has inherited shares in a company that the firm audits. What is the appropriate action?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The manager should dispose of the shares as soon as practicable or be removed from the audit team
Explanation
A direct financial interest in an audit client creates a self-interest threat so significant that no safeguard other than disposal or removal from the team is adequate. The way the shares were acquired does not change the threat, although it allows a short period to dispose of them. Disclosure in the auditor's report is not an acceptable safeguard.
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