ACCA/CAT

Question Four

This 20-mark question was based on a manufacturer of luxury mobile phones，LV Fones Co，and addressed the syllabus area of professional ethics.

Part （a）for 5 marks was unrelated to the scenario and required five threats from the ACCA’s Code of Ethics and Conduct along with an example for each threat.

This part of the question was very well answered by the vast majority of candidates with most scoring full marks. A significant minority of candidates confused the requirement for threats with that of the fundamental principles and hence provided answers in relation to objectivity，integrity，confidentiality，professional competence and due care and professional behaviour；unfortunately these answers gained no marks. In addition some candidates did not provide an example of each threat，choosing instead to explain the threat in more detail，however this was not what was required.

Part （b）for 10 marks required an explanation of the ethical threats for LV Fones Co along with an explanation of how the threats might be avoided.

This question was well answered by most candidates；they were able to clearly identify from the scenario the ethical issues impacting the audit of LV Fones. Some candidates did not explain the threats in sufficient detail， sometimes just identifying the issue and not explaining how this was an ethical threat. For example，many identified that the offer of a staff discount of 10% was an issue，however if they did not then go onto explain that this was a self-interest threat they would have only gained . rather than 1 mark.

The second part of this question required methods for avoiding the threats，candidates performance here was generally satisfactory. Some answers tended to be quite brief and to include unrealistic steps， such as resigning as auditors to reduce the risk of fee dependence，not allowing the finance director and partner to be friends or suggesting the finance director should resign. In addition many candidates demonstrated that they had not read the scenario properly，as a common suggestion was to not allow the audit senior to undertake the secondment，this was despite the scenario clearly stating that the secondment had already occurred.

Part （c）for 5 marks required the steps an auditor should perform prior to accepting a new audit engagement. This question was well answered by most candidates who were able to identify steps such as contacting the previous auditors as well as various client screening procedures.

（责任编辑：中大编辑）

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