ICAEW SE · Chapter 9 · Question 7 of 9
When evaluating whether a threat to the fundamental principles is at an acceptable level, which test does the ICAEW Code of Ethics require an accountant to apply?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The reasonable and informed third party test
Explanation
An acceptable level is one at which an accountant using the reasonable and informed third party test would likely conclude that the accountant complies with the fundamental principles. The test considers whether a hypothetical person with relevant knowledge, weighing all the facts, would reach the same conclusion. Legal and accounting tests such as the balance of probabilities and going concern are not used for this purpose.
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