Requirement (b) was for 6 marks, and outlined the situation of an existing client facing going concern problems.

The audit engagement partner had been asked to accompany the managing director to a meeting with the bank where additional finance would be sought, and there were intimidation threats in that the client had threatened to put the audit out for tender, and there were also outstanding fees.

Again, candidates generally did well on this requirement, identifying and explaining the correct ethical threats, and on the whole recommending appropriate courses of action. The only problem in some scripts was a focus on the lack of integrity of the managing director, rather than discussing specific ethical threats raised.