Question 1 - Part c

In this lesson

1. 0:00 Ethical and professional issues in audit
2. 0:26 Distinguishing ethical from professional matters
3. 1:04 Marking allocation and strategy
4. 1:22 Internal controls engagement ethical risks
5. 3:00 Self-review and management threats explained
6. 4:41 Safeguards for controls review work
7. 6:04 Loan guarantee prohibition analysis
8. 7:29 Writing your ethics answer effectively
9. 10:20 Management responsibility and independence safeguards
10. 12:33 Declining the loan guarantee

About this lesson

You'll discover how to spot self-review threats, management threats, and conflicts of interest, then recommend appropriate safeguards or actions to address them. This video walks you through a realistic scenario involving two separate ethical challenges: an internal controls review bundled into the audit fee, and a request to guarantee a client loan. You'll learn to distinguish between ethical threats (which threaten auditor independence) and professional issues (commercial or engagement matters). The lesson shows you how to structure your answer to earn all eight marks by explaining each threat clearly, demonstrating professional scepticism, and proposing practical actions—each action typically worth one mark. You'll also discover important nuances, such as why internal audit services are prohibited for listed clients but permissible for unlisted ones, and how to use written representations to manage management threats. The approach emphasises showing your judgement and understanding of the code of ethics, not just identifying issues. This directly applies to AA (Audit and Assurance) papers and similar professional qualifications where ethical reasoning is essential to passing.

Duration: 14m