ACCA Financial Reporting FR F7

ACCA Financial Reporting (FR)

Previously Known as F7 ¬ ACCA FR Textures

Books & Revision Kits

FR Video lectures

ACCA Member acca qualification
ACCA Member Journey

Financial Reporting FR (F7) is the 7th paper of ACCA & and the advanced level of FA (F3).

ACCA FR Relation with other papers of ACCA
ACCA FR Relation with other papers of ACCA

This paper deals with the Financial accounting.

The main purpose of this paper to build capabilities & skills in applying International Accounting Standards and theoretical framework. and interpretation of Financial Statements

Financial Statements

  • Statement of Financial Position (Balance sheet)
  • Income Statement
  • Statement of cash flow
  • statement of changes in equity
  • Diclouser to Financial Statements

FA is mainly calculation based paper- Examiner wants you to apply standers on different scenarios which are given in exam paper

For Example, a question in exam is from IFRS 16, So for the most problem examiner with the check, your knowledge and application of this stander as technically as He/She can.

But if you have a full grip on International Accounting Standers And IFRS, Then belive exam question will be just a child play for you and you will pass this Exam Easily

FR Paper Pattren

  1. Section A: 15 Objective Test Questions, 2 Marks each 30Marks)
  2. Section B: 3 OT Case Questions. Each cash contains 5 OT Questions (30Marks)
  3. Section C: 2 Constructed Response Questions, 15Marks each (40 Marks)
    • Interpretation of Financial Statements
    • Preparation of Financial Statements (Individual or Group)

If we calculate time per mark, its 1.8 Minutes per mark.

So we have

  • 54 Minutes total for section A
  • 18 Minutes for each questions in section B
  • 36 Minutes for each question in section C

Exam time allocated 3 Hours
Passing Marks 50

ACCA FR Syllabus 2021

The Conceptual and Regulatory framework for Financial Reporting

  • Property Plant Equipment
  • Intangible Assets
  • Inventory
  • Biological Assets
  • Impairment of assets
  • Financial instrument
  • leasing
  • Provision and event after the reporting period
  • taxation
  • Reporting Financial Performance
  • Revenue
  • Government Grant
  • Foreign Currency transaction

FR Pass Rate

Dec 2017Jun 2018Dec 2018Jun 2018Dec 2019

Also, Read
How to pass ACCA FR
ACCA Exam Tips


ACCA Performance Management PM F5

ACCA PM Performance Management – Previously Know as F5 ¬ ACCA PM Course

ACCA PM Syllabus 2021

  • Cost Accounting
    1. Activity-Based Costing
    2. Target Costing
    3. Life cycle costing
    4. Throughput Accounting
    5. Environmental Accounting
  • Decision-Making Techniques
    1. Relevant cost analysis
    2. Cost volume analysis
    3. Limiting factors
    4. Pricing Decisions
    5. Make or buy and other short term decisions
    6. Risk & Uncertainty
  • Budgeting
    1. Budgetary systems and types of budget
    2. Quantitive analysis in budgeting
    3. Stander costing
    4. Material mix & Yield variance
    5. Sales mix & Quantity variance
    6. Planning and operational variance
    7. Performance analysis
  • Performance measurement and control
    1. (PM)Performance management information systems
    2. Sources of management information
    3. Management reports
    4. Performance analysis in private sector organizations
    5. Divisional performance and transfer pricing
    6. Performance analysis is not for profit Org and the public sector
    7. External consideration and behavioral aspects

Introduction: Performance Management (PM) is the fifth paper of ACCA, Previously know as F5.

As well this is the advanced level paper of F2, Mostly topics were introduced in F2, But the testing level is high in PM(F5)

First of all, The main purpose of the paper is to build basic skills related to the Management Accounting

Also, PM is a Computer-based exam, available 4 times a year, March-June-September-December

Hence For exam timetable: Click Here

Furthermore, Mainly this is the mixed paper of the reticle and calculation, However, the major portion consists of theory,

Also, Performance Management is considered one of the toughest paper in ACCA’s Fundamental papers, with the lowest passing rate after Audit (AA), See below the official passing rate issued by the ACCA

ACCA Pass Rate, acca passing ratio

However, with little bit Management in study style, you can easily pass this paper,

In PM there are four key area

  • Cost Accounting area (includes ABC costing, Life cycle costing, Throughput accounting, Target costing and Environment costing) Competitively is the easy part of this paper because just after learning you can easily calculate questions of this area
  • At the other end, Decision-making technique is the tricky and difficult area (includes Relevant cost, cost volume, Limiting factor analysis, Pricing. make or buy decision and risk and uncertainty) in this area examiner of PM want you to explain your calculated calculation, to check your concepts and understandings about the topic
  • Also, the next one, Budgeting, Budgeting in Performance Management paper consider as a difficult area of the paper, Most of the student weak in budgeting, because is theoretical area and with only a few calculations, But this can be learned very easily if your concepts are clear and strong, you just need to explain what you have learned,
    Also includes VARIANCE ANALYSIS, Variance analysis is a very easy topic, just a few calculations and this considers very easy marks in exams

As a result, you must cover the entire syllabus of PM, Similarly, practice past papers as much as you can as this is the key to success in exams, 

Practice makes perfect

ACCA PM Paper Pattern:

  • Objective Test questions
    1. Multiple-choice questions
    2. Multiple response questions
    3. Fill in the blank
    4. Drop Down list
    5. Drag and drop
    6. Hot Spot
    7. Hot area
  • Objective Test Case questions: Each OT case contains a group of five OT questions based around a single
    scenario. These can be any combination of the single OT question types and
    they are auto-marked in the same way as the single OT questions
  • Constructed response questions: For these question types, students produce individual wrote and numerical answers which they insert into a blank word processing pages, blank spreadsheets, or pre-formatted templates. A number of standard word processing and spreadsheet functions are available via the menu and toolbar for students to use when responding to the question.

  • Section A:
    • 15 Ots, each having 2 marks making a total of 30 marks
  • Section B:
    • 3 OT Cases, each having 5 OTs making a total of 30 marks
  • Section c: 2CRs, each having 20 marks, each having multiple requirements making a total of 40 marks.

The total time allowed in the exam is 3 hours and 15 minutes, and you need probably perfect time management to complete paper, this is only possible with practice practice and practice

So due to, more details visit ACCA official website: Click Here

Books & Revision Kits

And most noteworthy below we sharing ACCA PM video lectures with you, Held by ACCA

PM Video Lectures

PM Pass Rate

Dec 2017Jun 2018Dec 2018Jun 2018Dec 2019

ACCA AAA Syllabus 2021

ACCA Advanced Audit and Assurance AAA

ACCA AAA (Advanced Audit and Assurance) – Previously known as P7 – AAA, And ACCA

ACCA AAA Syllabus 2021

AAA Syllabus includes two sections

1: Audit of historical Financial Statements (All syllabus of AA)

Acceptance of Audit
Audit planning & Risk Assessment (18-24 Marks Normally in Question No 1)
Audit Evidence (20-30 Marks Normally It can be tested anywhere in the paper, in any part out of 3)
Review (Around 15 Marks in every paper)

2: Other Areas
Two sections in this area

Ethic & Practice Management.
(Around 20 Marks from this area)
Other Assignments
(Q3 10-20 Marks Normally)
Audit RegulationForensic Audit
Code of ethicsPFI
Audit QualitySocial & Environment Audit
Advertising Professional servicesAudit of performance information of public sector
Due diligence

Paper Pattern

  • Question 1 50 Marks Case study and can b from
    • Risk (Must)
    • Audit Procedure (Usual)
    • Ethic (Usual)
    • Any other topic from syllabus
  • Question 2:
    • Review and report (Must)
    • Any other topic can be test with review
  • Question 3:
    • Other assignment + any other topic can be test here

Books & Revision Kits

How to pass AAA (Tips and Tricks)

AAA video lectures

AAA Pass Rate

Dec 2018March 2019June 2019Sep 2019Dec 2019

Find Us on Facebook

ACCA AA Syllabus 2021

ACCA AA Audit and Assurance

ACCA Audit and Assurance (AA)

ACCA AA Syllabus 2021

F8 AA syllabus

Topic-wise Notes

What is Audit?

First of all the basic means of Audit is investigations.

Another way in accounts, this word being used Audit for the examination of Financial Statements prepared by entities annually.

  • Balance sheet
  • Statement of profit and loss
  • Income statement
  • Statement of changes in equity
  • Statement of cash flow

Likewise, ACCA AA (F8) is a theoretical paper Probably consists of 90% theory and 10% calculations.

In theory, examiner test the concepts of students by giving a situation, and students need the resolve that situation in different ways in different questions, like Analytical procedures, Test of controls, internal controls

Also in other parts of the parts consist of calculations, Calculations of this part probably from IAS-IFRS, like if examiner explains the situation by referring IFRS-16 then you should be attentive there is something wrong in the calculation of IFRS 16 which examiner wants you to correct this problem,

Furthermore, like assets are recorded correctly, Disposals are calculated in the right way, Depreciation treatments accounting according to the IFRS 16,

Similarly with other accounting standers.

The main motive of ACCA AA paper

Is to develop basic understanding and knowledge of the audit process to give an assurance engagement to a Clint by following the Professional Regulatory Framework

However, to pass AA you need to:

  • Concepts regarding the audit and assurance
  • what is procedures of an audit, how an auditor perform his audit assignments
  • Understand and evaluation of internal controls to assess the risk factors

Study Plan

Material for topic preparation: Any approved learning provider content along with the revision notes.

Material for Question practice: Past exams (Any Revision Kit- The answers on the ACCA website do not reflect the changes in the accounting and auditing standards). Please use the latest Kit (for Sept 2017 exam session) for answers.

Key preparatory recommendations:
-Attempt each question first yourself
-THEN read the answers
-Read the answers constructively- annotate and underline the key points that you missed, commonly used terminology, etc.

ACCA AA Practice Questions Topic Wise

Assurance & RegulationJune 2015-Q5c
Dec 12- Q2a,c
June 12- Q1c
Accepting audit engagementsSept/Dec Hybrid 2015-Q2 a,b
Dec 2013-Q4a,b
June 11 Q2b
Audit planningSept/Dec Hybrid 2015-Q2c
Sept/Dec Hybrid 2015-Q4
June 2015-Q5b
Audit planningJune 2014-Q3a
Dec 2013-Q1a,b,c
June 2013-Q3 ( Ratios)
Audit planningDec 2012-Q3a,b
Dec 2010-Q3 ( Ratios)
ICS-SalesDec 2014-Q5a
Dec 2013-Q3
June 11- Q1a,c
ICS-purchasesJune 2015-Q4
June 2013-Q1b,c
Dec 10- Q1a,b, Q4b
ICS-payrollSept/Dec Hybrid 2015-Q5 a,b
June 2014-Q1a,b
Dec 2011- Q1a
Other IC topicsJune 10- Q3b
June 2015-Q2
Dec 09- Q3b
June 2012- Q1a
Evidence and proceduresJune 12- Q4a
June 11- Q3a
Substantive-Sales and trade receivablesJune 2015-Q6a and Q6biii
Dec 2014-Q5b
Audit procedures-InventorySept/Dec Hybrid 2015-Q6a, bi
Dec 2014-Q6bii
June 2014-Q3b
Dec 2012-Q1a,b
June 2012-Q4a
Substantive-Property, Plant & Equipment
Dec 2014-Q6bi
June 2013-Q4a
June 2012-Q1b,c
Substantive-purchases and trade payable sJune 2015-Q6bi
PayrollSept/Dec Hybrid 2015-Q5c
Dec 2014-Q1
June 2014-Q1c,d
Intangible assetsSept/Dec Hybrid 2015-Q6bii
BankJune 2015-Q6bii
June 2013-Q1d
RemunerationJune 2014-Q3c
Relying on work of othersDec 2014-Q6a
Substantive practiceDec 2013-Q1d
Dec 2012-Q4b
June 2012-Q4b
Fraud, Laws & regulationsJune 2015-Q5a
Dec 12- Q2b
June 12- Q3a
Audit documentationJune 12- Q4c
June 11- Q2a
CAATsDec 10- Q2c
SamplingDec 2012-Q1c
June 12- Q2b
Going concern reviewSept/Dec Hybrid 2015-Q3
June 2014-Q5a,b,c
June 2012-Q5a,b,c
Subsequent events review, overall reviewDec 2011-Q5a, bi, and bii
Dec 2008-Q5
June 2013-Q1a
Dec 2010-Q5a,b
Audit opinion & reportSept/Dec Hybrid 2015-Q6c
June 2015-Q3
Dec 2014-Q4
Dec 2014-Q6c
June 2014-Q5d
Audit opinion & reportJune 2013-Q5c
Dec 2012-Q5
June 2012-Q5d
Dec 2011-Q5biii
June 2011-Q5c
EthicsSept/Dec Hybrid 2015-Q1
June 2015-Q1
June 2014-Q3d
Dec 2013-Q4c
June 2012-Q3b,c
Corporate governanceDec 2014-Q3
Internal auditJune 2014-Q4
June 2013-Q4b,c,d
June 2013-Q5a,b
Dec 2012-Q3c
June 2012-Q1d,e
June 2012-Q3d
Full exam paper under exam conditions ( time managed)March/June 2016
Sept 2016
Dec 2016
March/June 2017
ACCA Audit and Assurance Topic-wise questions for practice, To help out students we are providing you this list, so when students learn one topic they can practice its relevant question to get a full grip on that topic

How to Pass ACCA AA

AA Video Lectures

Books & Revision Kits

AA Pass Rate

Dec 2017Jun 2018Dec 2018Jun 2018Dec 2019

Find Us on Facebook

Previously Known as F8

ACCA Strategic Business Leader (SBL) Introducation

What is SBL

Strategic Business Leader (SBL)

An innovative case study examination

Integrated technical, ethical and professional skills.

Paper Structure ACCA Strategic Business Leader

  • 4-hour duration allowed (240 minutes)
  • 100 marks, 80 for application of technical content and 20 for professional skills
  • 50 marks to pass
  • 12-15 pages of case study information
  • All questions are based on the same scenario
  • The emphasis is on a combination of technical and professional skills

The skills and expertise you’ll need

A successful student should:

  1. bring forward the skill and knowledge from earlier learning and exam in the context of acting as a strategic business leader
  2. take a board interest in their day to day work, undertake wider reading and develop business acumen in order to apply this to the scenario given
  3. demonstrate their technical skills in a practical context, professionalism and professional skills
  4. show the ability to access, interpret and synthesize the scenario and other information to provide appropriate solutions to the tasks required.
SBL Strategic Business Leader ACCA
SBL Strategic Business Leader

1.1 Being Leader

As a leader, you are expected to be able to analyze a business situation and provide and implement an appropriate, effective and sustainable solution. This Means that can

  • be clear and focussed, identifying the key issues in any situation
  • analyze and address ethical concerns
  • use technical principles and quantitative study to move out key issues, confirm causality and integrate a broad range of circumstances into a coherent argument
  • make recommendations that meet the needs of users and ‘fit for purpose’.

1.2 Thinking Strategically

Having a strategic perspective means that you can do the following:

  • Take a long term perspective.
  • Look at the whole organization as well as individual products/divisions/ SBUs.
  • Set the selection of the whole organization and integrate its activities.
  • Consider the views of all stakeholders, not just shareholders.
  • Analyze the organization’s resources and define resource requirements
  • Relate the organization to its environments.
  • Look at gaining a sustainable competitive advantage.
Thinking Strategically SBL ACCA
Thinking Strategically SBL ACCA
SBL Strategic Business Leader ACCA
SBL Strategic Business Leader ACCA
SBL Strategic Business Leader ACCA
SBL Strategic Business Leader ACCA
ACCA SBL Marks Allocation
ACCA SBL Marks Allocation

A quick guide to dividing your time in Exam

  • 25% Leadership and Governance
  • 25% Strategy and Risk
  • 50% Delivering Strategy

Three Phases of study for Strategic Business Leader

  1. Learning phase
  2. Revision phase, and
  3. final preparation (including mock exams and feedback) phase.

Read More: ACCA Video Lectures


Categories SBL

What is Materiality?

What is Materiality

Definition: ‘Mistakes, including omissions, are supposed to be material if they, alone or on the whole, could reasonably be expected to affect the economic decisions of users taken on the basis of the financial statements.

In assessing the level of materiality there are a number of sections that should be examined.

Firstly the auditor must suppose both the amount ‘quantity’ and nature ‘quality’ of any misstatements or a mixture of both.

The quantity of the misstatement refers to the comparable size of it and the quality refers to an amount that might be low in value but due to its influence could affect the user’s decision, for example, directors’ activities.

In assessing material amount the auditor must consider that a number of errors each with a low value may be material when aggregated amount to a material misstatement.

The assessment of what is material is finally a matter of the auditor’s professional capacity, and it is influenced by the auditor’s understanding of the financial information needs of users of the financial statements and the detected level of risk;

The higher risk then takes a lower level of overall materiality.

Material by the amount for F/S as a whole

  • 1% of revenue
  • 2% of total assets
  • 10% of PBT

Material by nature

  • Related party transactions
  • Bank balances
  • Fraud/ Unlawful transactions (e.g. illegal payments)
  • Violation of regulatory requirements
  • Failure to meet requirements of debt-covenants
  • Key Performance Indicators of the company (e.g. converting loss into profit)
  • Incorrect selection or application of an accounting policy that has an immaterial effect on the current period but is likely to have a material effect on future periods

Performance Materiality

Performance materiality is usually set at a level lower than overall materiality. It is used for testing each transaction, account balances, and disclosures. The purpose of performance materiality is to decrease the risk that the total of mistakes in balances, transactions, and disclosures does not in total exceed overall materiality.

Planning Materiality Vs Performance Materiality

Planning MaterialityPerformance Materiality
1. Have Benchmark1.No Benchmark (Auditors assessment)
2. One single amount for the entire Financial Statement2. Different amounts for different ledgers/accounts.
3. Use to judge important account balance and class of transaction3. Individual balance in an individual 

Read More: AUDIT RISK and Auditor Response


Threats to Auditor Independence

threats for auditor

International Code of Ethics for Professional Accountants ACCA AA & AAA

Conceptual Framework

Conceptual Framework
Conceptual Framework

What is Auditor Independence?

Auditors are expected to provide an unbiased opinion on the work that they have performed. An auditor who has a lack of independence or has threats to auditor independence, his audit report useless to those who rely on it.

For example, consider yourself a potential shareholder in XYZ Company. If you know that the auditor for XYZ Company keeps a personal relationship with the CEO of the company, would you trust that the audited work is a fair representation of the company’s financial standing? How can you be certain that the auditor and CEO did not influence issues a favorable audit report? so must ensure that Auditor no have Threats to Auditor Independence

Once you have identified a threat from the question scenario, you will need to name the threat, explain WHY it is a threat to the auditor and tell the safeguard for that threat.

Here are a few techniques that can be avoided Threats to Auditor Independence,

Threats to Auditor Independence?

In Audit, there are five threats that hurt the independence of the auditor. Before the start of an audit engagement, it is crucial that each member of the audit team independence. If an auditor is exposed to a certain threat, He/she should either develop safeguards to reduce the threat to an acceptable level or resign from audit engagement. here we are going to discuss threats to auditor independence and possible remedies

QCR: Quality Control Review ( independent partner review)- Having a professional accountant who was not involved with the non-assurance service review the non-assurance work performed

Chinese walls: The use of separate engagement teams, with different engagement partners and team members

Public interest entities are:

  • (a) All listed entities; and
  • (b) Any entity:
    • Defined by regulation or law-making as a public interest entity
    • OR
    • For which the audit is required by law and regulation to be conducted in compliance with the same independence requirements that apply to the audit of listed entities. Such regulation may be circulated by any relevant regulator, including an audit regulator
threats for auditor

1. Self interest threat and safeguards

The threat that a financial or other interest will inappropriately influence the auditor’s judgment or behavior.
Threat Safeguard
Direct financial interestA member of the assurance team or the firm having a direct financial interest in the assurance client.Remove the individual from the audit team the self-interest threat created would be so significant that no safeguards could reduce the threat to an acceptable level.
Gifts and hospitalityNature, value and intent of offer to be considered Not allowed unless insignificant ( politely decline)
Fee dependenceA firm having fee dependence on total fees from a client.Listed clients: If gross recurring fee from one client greater than 15% of the firm’s revenue for two consecutive years,– Tell client’s BOD– Independent QCR or external QCR before
After issuing 2nd year’s opinion Other clients:– Reducing the dependency on the client;–
External quality control reviews OR Consulting a third party, such as a professional regulatory body (E.g ACCA, ICAEW) or a professional accountant on key audit judgments.
Recent Service with an Audit ClientIf a member of the audit team has recently served an employee of the audit clientRemove from the team if worked at the client in the year being audited at a position to exact significant influence over the subject matter.
Close business relationshipA member of the assurance team (or the firm) having a significant-close business relationship – Commercial relationship,
Common financial interest Examples: a joint venture with the client or a controlling owner/ director, formal marketing of each other’s product, combine the services of the firm with those being offered by the client and market the package.
If material, not allowed (The threat created would be so significant that no safeguards could reduce the threat to an acceptable level.
Contingency feeFirm going to enter into a contingency fee arrangement relating to an assurance engagementPolitely decline the proposed contingent fee arrangement, Inform the client that the fees will be based on the level of work required to obtain sufficient and appropriate audit evidence.
Overdue feeMight be regarded as being equivalent to a loan to the client if fees due from a client(Audit Client) remain unpaid for a long time, especially if a significant part is not paid before the issue of the audit report for the following financial yearDiscuss with TCWG the reasons why the payments have not been made. Should agree with a revised payment method which will result in the fees being settled before much more work is performed for the current year audit
Loans and guaranteeIf not under normal lending conditions, No safeguard acceptable under normal lending conditions- review by network firm.
Serving as a Director or Officer of an Audit ClientNot allowed. (Particular reference made by the code to the role of the Company Secretary. If allowed under local laws or professional rules, the duties and activities shall be limited to those of a routine and nature of administrative, such as preparing minutes and maintaining statutory returns)
Recruitment services (especially hiring of senior management)Listed clients: Not allowed for directors or senior positions related to Financial Statements preparation. Otherwise,
The final decision should be by the client and DO NOT negotiate on the client’s behalf firm can undertake roles such as reviewing a shortlist of other candidates. However, they must ensure that they are not interfering to undertake management decisions and so must not make the final decision on who is appointed
Employment negotiations with the audit client.A member of the audit team entering into employment negotiations with the audit client.Remove the individual from the audit team– A review of any significant judgments made by that individual while on the team
Compensation and Evaluation Policieswhen a member of the audit team is evaluated on or compensated for selling non-assurance services to that clientAudit partner should not be evaluated on or compensated based on that partner’s success in selling non-assurance engagement to the partner’s audit client

2. Self Review threat and safeguards

The threat that an auditor will not appropriately evaluate the results of a previous judgment made or service performed by himself.
Threat Safeguards
Self-ReviewThe threat that the auditor will not appropriately evaluate the results of a previous judgment made/or service performed by himProvision of other services to an audit client (Note: other threats due to this are self-interest because of the fee element and advocacy

Safeguard for Listed Clients: Most non-assurance services related to financial reporting are not allowed.
Other clients: Segregation of duties, Chinese walls, QCR
Temporary staff assignmentsThe lending of staff by a firm to an audit clientShould ideally not be made a part of the audit team. Generally acceptable if no management responsibility is taken up and the audit client shall be responsible for directing and supervising the activities of the loaned staff
Recent Service with an Audit Clienta member of the audit team has recently served as an employee of the audit client- The threat is that the member of the audit team has to evaluate elements of the financial statements for which he had prepared the accounting records while with the clientRemove from the team if worked at the client in the year being audited at a position to exert significant influence over the subject matter

3. Familiarity Threat and safeguards

The threat that due to a long or close relationship with a client or employer,
Threat Safeguard
Long AssociationLong Association of Senior Personnel with an Audit ClientListed clients: 7 years plus 1 year of flexibility than a gap of two years for audit partner– In these 2 years gap period, cannot participate in the audit Or provide quality control for the engagement, Or consult with the engagement team or the client regarding technical or industry-specific issues

Other clients: Rotate members, & QCR
Family and Personal RelationshipsRemove from the team if the relationship is with a senior person at the client with influence over the financial statements.
Employment with an Audit ClientThe director or a senior member of the audit client has been a member of the audit team or partner of the firm in the pastListed client: for partners, ok if twelve months have passed since the individual was Partner.

Other safeguards- Modifying the audit plan;-any work already undertaken by that individual should be independent reviewed.-Assigning individuals to the audit team who have enough experience in relation to the individual who has joined the client

4. Advocacy Threat and safeguards

The threat that an auditor will promote a client’s or employer’s position to the point that the auditor objectivity is compromised.
Threat Safeguard
Legal servicesLegal services To audit client ( For example contract support, litigation, mergers, and acquisition legal advice, and support to clients’ internal legal departments)If they relate to resolving a dispute or litigation when the amounts involved are material to the Financial Statements: Not allowed
Promote client/sharesThe auditor asked to promote client/shares in a client or asked to accompany the client to a meeting with the bankNot allowed (Politely decline)

5. Intimidation Threat and safeguards

The threat that an auditor will be deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the auditor.
Threat Safeguard
Threat of dismissalThreat of dismissal or replacement of auditor/or his close family member over a
disagreement about the application of an accounting principle.
Tell client’s TCWG– ensure that all audit engagements are conducted in accordance with
International Standards on Auditing– Ensure you gather sufficient appropriate evidence

*A dominant personality at the client attempting to influence the decision-making process, for example, the application of an accounting principle.
*A firm being pressured to reduce inappropriately the extent of work performed in order to reduce fees.
*An auditor feeling pressured to agree with the judgment of a client employee because the employee has more expertise on the matter in question.
Actual or Threatened Litigation(For example regarding a previous audit report)- When the firm and the client’s management are placed in adversarial positions by actual or threatened legally, affecting management’s willingness to make complete disclosuresQCR– If a team member involved, remove from the – Withdraw from the cement if very significant
Fee dependenceFee dependence, close personal relationships, business relationships also cause intimidation
The safeguards for each will be the same as discussed earlier.

6. Conflict of Interest Threat and safeguards

Threat Safeguard
Firm competes with client or firm has a joint venture with a competitor of a client or the firm has competitors as clientsMembers should place their clients’ interests before their own and should not accept or continue engagements which threaten to give rise to conflicts of interest between the firm and the client. Any advice given should be in the best interests of the company.
A conflict of interest arises where an auditor acts for both a client company and for a competitor company of the client. Where the acceptance of an audit engagement would, despite safeguards, materially prejudice the interests of any clients, the appointment should not be accepted, or one of the appointments should be discontinued.
Where the acceptance of engagement would, despite safeguards, materially prejudice the interests of any clients, the appointment should not be accepted, or one of the appointments should be discontinued.
Managing conflicts of interest

1. Full disclosure is important – both companies should be fully aware that the firm is acting for the other party.
2. Regular review of the situation by an independent senior partner
3. Use of different partners and teams of staff for different engagements
4. Internal procedures within the firm
-Procedures to stop access to information, for example, strict physical separation of both teams, private and secure data filing.
-Clear guidelines for members of each assurance engagement team on issues of security and confidentiality. These guidelines must be included within the audit engagement letters.
-Potentially the use of confidentiality agreements signed by employees and partners of the firm
5- Advising at least one or all clients to seek additional advice

ACCA Past Papers  Attempt These past papers questions to check your understanding:

  • Sept/Dec Hybrid 2015-Q1
  • June 2015-Q1
  • June 2014-Q3d
  • Dec 2013-Q4c
  • June 2012-Q3b,c

This is the detailed explanation on Threats to Threats to Auditor Independence, and how its work, don’t forget to give us feedback by commenting below

Read More: How to Pass ACCA P7 AAA

Find Us on Facebook

Fundamental principles of ethics

Fundamental principles of ethics

Here are Fundamental principles of ethics described by ACCA to be followed by all ACCA members, Students must be memorized all of them, this can be tested straightforward and in MCQ’s in CBE.


5 Fundamental principles of ethics described by ACCA


The auditor should be straight forward & honest in all professional and business relationships. Auditors will be associated with communications, returns or other information and reports where they believe that the information contains materially false or misleading statements.


Members should not allow bias, conflicts of undue or interest influence of others to override professional or business judgments.

Read moreFundamental principles of ethics