• 1 Marks

AA – L2 – SA – Q5.2 – Ethical Threats

Threat from designing client IT system.

Sapphire & Co are the auditors of Zenith plc, a listed company. Zenith plc has approached Sapphire & Co to help it design and implement a new IT system. Which of the following threats is created if Sapphire & Co accepts this assignment?

A   Intimidation threat

B   Self-review threat

C   Advocacy threat

D   Familiarity threat

B

Explanation:
Designing and implementing a new IT system for an audit client creates a self-review threat, as the auditor would later audit systems they helped develop, potentially compromising objectivity. Intimidation, advocacy, and familiarity threats involve different issues (e.g., client pressure, promoting the client, or long-term relationships). Option B is the correct answer, as per IFAC ethical principles.

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