Question 2 - Set up

In this lesson

1. 0:00 Ethical and professional issues in audits
2. 0:26 Understanding professional versus ethical issues
3. 1:06 Marking allocation and action strategy
4. 1:22 Internal controls engagement risks identified
5. 3:00 Self-review and management threats explained
6. 4:41 Safeguarding actions for controls work
7. 6:04 Loan guarantee financial interest threat
8. 7:15 Code of ethics prohibition on guarantees
9. 7:53 Structuring your ethics answer effectively
10. 10:18 Management responsibility and decision-making safeguards
11. 12:18 Loan guarantee rejection and conclusion

About this lesson

The video walks you through a real scenario involving two separate issues: a request to review internal controls beyond the audit scope, and a request to guarantee client financing. You'll see how to spot the threats—self-review, management threat, and self-interest—and understand why each one matters for auditor independence. The tutor explains the distinction between ethical issues (which threaten objectivity) and professional issues (which relate to engagement structure and commercial practice), then demonstrates how to structure a complete answer that earns all available marks. You'll learn the practical actions that address each threat: using separate teams, obtaining written representations from management, and knowing when to decline work entirely. The lesson emphasises that thorough explanation of each threat—not just naming it—is what earns marks and demonstrates professional judgement. By the end, you'll have a clear framework for tackling ethics questions confidently and systematically.

Duration: 14m