This 10-mark question required identification and explanation of five ethical threats faced by the auditor of Willow and how these threats could be reduced. This question was answered well by most candidates.

In order to score the identification ½ marks, candidates were required to identify the fact from the scenario which may affect independence and from that identify which category of ethical threat this created.

The explanation ½ marks were awarded if candidates then went on to explain how this may affect the auditor’s independence. Many candidates did not explain the threats correctly or in sufficient detail, often stating “this will reduce independence and objectivity”, this is not an explanation of HOW objectivity could be affected.

For example, many identified the fact from the scenario that Bethan Norman was being asked to take on the role of independent review partner, despite having been the engagement partner for seven years.

Those candidates that went on to correctly identify this as being a familiarity threat were awarded the identification ½ marks. The explanation ½ marks were given if candidates explained that as a result of the long standing relationship Bethan may be too trusting or insufficiently sceptical when reviewing the
audit work.

Just identifying the fact would not score any marks, as the identification of the ethical threat was required along with an explanation.

For several points many candidates incorrectly identified the ethical threat, for example many classified helping to recruit a new non-executive director as an advocacy threat when it was actually a selfinterest, familiarity or intimidation threat.

Candidates must be able to correctly identify the type of ethical threat created in the circumstances and are reminded that the ACCA Code of Ethics and Conduct is an examinable document for F8.

Some candidates assumed that an issue had to be identified for each category of ethical threat; selfreview, self-interest etc. This resulted in them trying to identify a situation from the scenario to fit each type of threats.

This is not the correct approach as it is unlikely that the scenario will be based around one of each of the five ethical threats.