ACCA Advanced Audit and Assurance (AAA) Practice Exam

Which threat is described as when an audit firm promotes a position that compromises objectivity?

1. Self-review threat

2. Familiarity threat

3. Advocacy threat

4. Intimidation threat

The correct answer is: Advocacy threat

The situation described in the question refers to the advocacy threat. This type of threat occurs when an audit firm promotes a position or opinion that could compromise its objectivity. In essence, if the firm takes a stance or becomes an advocate for a particular outcome, it may create a conflict of interest. This is particularly pertinent in audit work, where auditors are required to maintain impartiality and independence to ensure the integrity of their assessments and findings. When an audit firm advocates for a specific position, it can lead to biases in their approach, potentially impacting their ability to make unbiased judgments about the audit subject. The other threats—self-review, familiarity, and intimidation—represent different scenarios that can affect an auditor's independence or objectivity, but they do not embody the direct promotion of a position like the advocacy threat does. The self-review threat involves an auditor evaluating their own work; the familiarity threat arises from relationships that may lead to complacency; and the intimidation threat is characterized by pressure or coercion from clients or other parties. Each of these has its own implications for independence, but advocacy specifically deals with advocating for a position that could skew objectivity, aligning perfectly with the scenario presented in your question.