ACCA AA Chapter 4: Professional Ethics - Practice Exam
(50 Questions)
Part 1: Questions
1 Which of the following is NOT one of the fundamental principles as set out in ACCA’s
Code of Ethics and Conduct?
A Professional behaviour
B Professional competence and due care
C Objectivity
D Honesty
2 To whom does ACCA’s Code of Ethics and Conduct apply?
A Only to ACCA members who are auditors
B To all ACCA members, affiliates, and students
C Only to all ACCA members
D Only to ACCA members, affiliates, and students working in auditing firms
3 Which of the following is a category of threat to compliance with the fundamental prin-ciples in ACCA’s Code of Ethics and Conduct?
A Self-awareness
B Management
C Self-review
D All of the above
4 An advocacy threat would arise if the auditor of a client company were to:
A Both prepare and audit the financial statements
B Become too sympathetic to the client’s interests
C Act on behalf of a competitor company
D Promote the client’s position to the extent that objectivity is compromised
5 Which of the following statements is true regarding the ACCA’s conceptual framework approach to independence?
A Safeguards must be applied to all threats identified
B The auditor should resign from the audit engagement if threats are significant
C Threats must be eliminated or reduced to an acceptable level
D The conceptual framework is optional for identifying threats
Trang 26 An audit supervisor will not be promoted to audit manager unless he agrees with an inappropriate accounting treatment This is an example of which threat?
A Self-interest
B Intimidation
C Familiarity
D Advocacy
7 The audit manager has applied for the job of finance director with the audit client This
is an example of which threat?
A Self-interest
B Self-review
C Familiarity
D Intimidation
8 Which of the following statements is correct for an audit client that is a public interest entity regarding fee dependency?
A If fees exceed 15% for two consecutive years, a safeguard must be applied
B If fees exceed 15% for any year, no safeguards are necessary if disclosed
C If fees exceed 15% for more than two years, the firm must resign
D No safeguards are required regardless of fee proportion
9 Which body issues the code of ethics adopted by the ACCA Code of Ethics and Conduct?
A PIOB
B IESBA
C IASB
D IAASB
10 The fundamental principle of integrity requires accountants to:
A Be straightforward and honest
B Maintain client confidentiality
C Exercise professional skepticism
D Avoid conflicts of interest
11 A self-interest threat may arise from:
A Auditing a close family members company
B Long association with the client
C Promoting the clients interests
D Preparing the clients financial statements
Trang 312 Which of the following is a safeguard against a familiarity threat?
A Accepting gifts from the client
B Rotating audit engagement partners
C Providing tax advice to the client
D Acting as the clients legal advocate
13 The principle of professional competence and due care requires accountants to:
A Maintain up-to-date knowledge and skills
B Promote the clients interests
C Avoid all conflicts of interest
D Disclose all client information
14 A self-review threat occurs when:
A The auditor has a financial interest in the client
B The auditor audits their own work
C The auditor is threatened by the client
D The auditor is too familiar with the client
15 Which of the following is a safeguard against an intimidation threat?
A Accepting client hospitality
B Obtaining legal advice
C Auditing a close friends company
D Providing non-audit services
16 The principle of confidentiality requires accountants to:
A Disclose client information to regulators
B Protect client information unless legally required
C Share client information with colleagues
D Disclose client information to competitors
17 Which of the following creates a familiarity threat?
A Auditing a client for many years
B Preparing the clients tax returns
C Holding shares in the client
D Promoting the clients shares
18 The ACCA Code of Ethics is based on the:
A UK Corporate Governance Code
Trang 4B IESBA Code of Ethics
C International Standards on Auditing
D IFRS Standards
19 Which of the following is a fundamental principle of the ACCA Code?
A Financial success
B Professional behaviour
C Client advocacy
D Risk management
20 An auditor providing non-audit services to a client may face:
A A self-review threat
B An intimidation threat
C A familiarity threat
D All of the above
21 Which safeguard can reduce a self-interest threat due to fee dependency?
A Accepting additional non-audit services
B Conducting a pre-issuance review by another firm
C Increasing client fees
D Ignoring fee thresholds
22 The principle of objectivity requires accountants to:
A Avoid bias and conflicts of interest
B Disclose client information
C Promote client interests
D Maintain client relationships
23 Which of the following is NOT a category of threat in the ACCA Code?
A Self-interest
B Self-review
C Advocacy
D Management
24 An auditor holding a financial interest in a client creates:
A A self-interest threat
B A self-review threat
C An advocacy threat
Trang 5D An intimidation threat
25 The IESBA Code of Ethics applies to:
A Only auditors
B All professional accountants
C Only ACCA members
D Only public interest entities
26 Which of the following is a safeguard against a self-review threat?
A Using different teams for audit and non-audit services
B Accepting client gifts
C Long-term client relationships
D Promoting client interests
27 The principle of professional behaviour requires accountants to:
A Comply with laws and regulations
B Disclose client information
C Promote client interests
D Avoid professional skepticism
28 An intimidation threat may arise when:
A The auditor audits their own work
B The client pressures the auditor to alter the audit opinion
C The auditor has a long-term relationship with the client
D The auditor provides tax advice
29 Which of the following is a fundamental principle of the ACCA Code?
A Confidentiality
B Financial success
C Client advocacy
D Risk management
30 A familiarity threat may arise from:
A Holding shares in the client
B Long association with the client
C Auditing own work
D Promoting client interests
31 The conceptual framework approach requires accountants to:
Trang 6A Identify, evaluate, and address threats
B Ignore minor threats
C Always resign if threats exist
D Apply safeguards only to significant threats
32 Which of the following creates an advocacy threat?
A Auditing a client for many years
B Representing the client in a legal dispute
C Holding a financial interest in the client
D Being pressured by the client
33 The principle of integrity includes:
A Avoiding conflicts of interest
B Being straightforward and honest
C Maintaining client relationships
D Promoting client interests
34 Which safeguard can reduce a familiarity threat?
A Accepting client hospitality
B Rotating audit team members
C Providing non-audit services
D Holding client shares
35 An auditor preparing a clients financial statements creates:
A A self-review threat
B An intimidation threat
C A familiarity threat
D An advocacy threat
36 The IESBA is overseen by:
A IAASB
B PIOB
C IASB
D FRC
37 Which of the following is a self-interest threat?
A Auditing a close friends company
B Promoting the clients shares
Trang 7C Auditing own work
D Client pressure to alter the audit report
38 The principle of confidentiality prohibits:
A Disclosing client information unless legally required
B Maintaining professional skepticism
C Avoiding conflicts of interest
D Complying with laws
39 Which of the following is a safeguard against an advocacy threat?
A Declining to represent the client in disputes
B Accepting client gifts
C Long-term client relationships
D Providing non-audit services
40 The ACCA Code requires accountants to:
A Promote client interests
B Maintain independence and objectivity
C Disclose client information
D Ignore minor threats
41 An intimidation threat can arise from:
A Auditing a client for many years
B Client threats to replace the auditor
C Auditing own work
D Holding client shares
42 Which of the following is a fundamental principle?
A Risk management
B Objectivity
C Client advocacy
D Financial success
43 A self-review threat may arise when:
A The auditor provides tax advice to the client
B The auditor holds shares in the client
C The auditor is threatened by the client
D The auditor has a long-term relationship with the client
Trang 844 The conceptual framework approach is used to:
A Ensure compliance with fundamental principles
B Prepare financial statements
C Set corporate governance policies
D Manage client relationships
45 Which of the following creates a self-interest threat?
A Receiving significant fees from a client
B Auditing own work
C Promoting client interests
D Long-term client relationships
46 The principle of professional competence requires:
A Maintaining up-to-date skills
B Promoting client interests
C Disclosing client information
D Avoiding professional skepticism
47 Which safeguard can reduce an intimidation threat?
A Obtaining an independent review
B Accepting client hospitality
C Providing non-audit services
D Maintaining long-term client relationships
48 The ACCA Code of Ethics emphasizes:
A Maximizing client profits
B Maintaining professional standards
C Promoting client interests
D Ignoring minor threats
49 Which of the following is NOT a safeguard against threats?
A Rotating audit team members
B Accepting significant client gifts
C Using independent reviewers
D Declining non-audit services
Trang 9Part 2: Answers with Explanations
1 D
Explanation: The ACCA Code of Ethics and Conduct, based on the IESBA Code,
out-lines five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour Honesty (D) is not explicitly listed as a principle, though it is a component of integrity, which requires being straightforward and honest
2 B
Explanation: The ACCA Code of Ethics and Conduct applies to all ACCA members,
affiliates, and students, regardless of their role or employment status It is not limited to auditors (A), only members (C), or those in auditing firms (D), ensuring broad applica-tion to maintain professional standards
3 C
Explanation: The ACCA Code identifies five categories of threats to compliance with
fundamental principles: self-interest, self-review, advocacy, familiarity, and intimida-tion Self-awareness (A) and management (B) are not recognized categories, making self-review (C) the correct choice
4 D
Explanation: An advocacy threat arises when an auditor promotes a clients position to
the extent that objectivity is compromised, such as representing the client in a dispute
or promoting their shares Preparing and auditing statements (A) is a self-review threat, sympathy (B) is a familiarity threat, and acting for a competitor (C) is not a specific threat category
5 C
Explanation: The ACCAs conceptual framework requires accountants to identify,
eval-uate, and address threats to compliance with fundamental principles, ensuring they are eliminated or reduced to an acceptable level Safeguards are not mandatory for all threats (A), resignation is not always required (B), and the framework is mandatory, not optional (D)
6 B
Explanation: Pressure to agree with an inappropriate accounting treatment to secure a
promotion creates an intimidation threat, as the auditors objectivity is compromised by external pressure Self-interest (A) involves personal gain, familiarity (C) involves close relationships, and advocacy (D) involves promoting the clients position
7 A
Explanation: Applying for a finance director role with the audit client creates a
self-interest threat, as the auditors personal career self-interests could compromise objectivity Self-review (B) involves auditing ones own work, familiarity (C) involves long-term re-lationships, and intimidation (D) involves client pressure
8 A
Explanation: For public interest entities, if fees from a client exceed 15% of the audit
firms total fees for two consecutive years, safeguards (e.g., an independent review) must
be applied to reduce the self-interest threat Resignation (C) is not mandatory, disclosure alone (B) is insufficient, and safeguards are required (D)
Trang 109 B
Explanation: The ACCA Code of Ethics and Conduct adopts the IESBA Code of Ethics
for professional accountants PIOB (A) oversees IESBA, IASB (C) sets IFRS, and IAASB (D) sets auditing standards
10 A
Explanation: Integrity requires accountants to be straightforward and honest in all
pro-fessional and business relationships Confidentiality (B), skepticism (C), and avoiding conflicts (D) relate to other principles or safeguards
11 C
Explanation: A self-interest threat arises when the auditor has a financial or personal
interest, such as holding shares in the client Auditing a family members company (A) is
a familiarity threat, long association (B) is also familiarity, and preparing statements (D)
is a self-review threat
12 B
Explanation: Rotating audit engagement partners reduces familiarity threats by
prevent-ing overly close relationships with the client Acceptprevent-ing gifts (A), providprevent-ing tax advice (C), or acting as an advocate (D) may create or exacerbate threats
13 A
Explanation: Professional competence and due care require maintaining up-to-date
knowl-edge and skills to provide competent services Promoting client interests (B), avoiding conflicts (C), or disclosing information (D) are unrelated to this principle
14 B
Explanation: A self-review threat occurs when an auditor audits their own work, such
as preparing and auditing financial statements Financial interests (A) create self-interest threats, client pressure (C) creates intimidation, and familiarity (D) arises from close relationships
15 B
Explanation: Obtaining legal advice can mitigate an intimidation threat by providing
independent support against client pressure Accepting hospitality (A), auditing a friends company (C), or providing non-audit services (D) may create or worsen threats
16 B
Explanation: Confidentiality requires protecting client information unless legally required
to disclose it Disclosure to regulators (A) is an exception, not a requirement, and sharing with colleagues (C) or competitors (D) violates the principle
17 A
Explanation: Auditing a client for many years creates a familiarity threat due to the risk
of becoming too sympathetic or trusting Preparing tax returns (B) is a self-review threat, holding shares (C) is self-interest, and promoting shares (D) is advocacy
18 B
Explanation: The ACCA Code is based on the IESBA Code of Ethics, which provides
a global framework for professional accountants It is not based on the UK Corporate Governance Code (A), ISAs (C), or IFRS (D)
19 B