Ethical standards in business are essential for maintaining trust, credibility, and long-term success. They help ensure that businesses operate in a manner that is fair, transparent, and responsible. The work of accountants will often further the aims of their employer, and this is not a problem except when circumstances arise that create a conflict with their duty to comply with the fundamental principles.

Threats to fundamental principles may arise due to the following:

1. Self-Review Threat: This occurs when individuals or businesses are in a position to review their own work or decisions. It can lead to biased judgments and unethical behavior, as there may be a temptation to overlook errors or issues to protect one’s interests.

2. Self-Interest Threat: This arises when individuals or businesses prioritize personal gain over ethical considerations. Conflicts of interest can lead to unethical decisions that benefit the individual or business at the expense of others.

3. Familiarity Threat: This threat occurs when there is a close relationship between individuals or businesses, leading to a lack of objectivity. Familiarity can result in favoritism, biased decisions, and unethical behavior.

4. Advocacy Threat: This arises when individuals or businesses promote a particular position or interest, compromising their objectivity. Advocacy can lead to biased judgments and unethical behavior, as the individual or business may prioritize the promoted interest over ethical considerations.

5. Intimidation Threat: This occurs when individuals or businesses are pressured or coerced into making unethical decisions. Intimidation can come from superiors, peers, or external parties, leading to compromised ethical standards.