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1.
In, Bunk & Co (June 2015) section B question and part (C)when we explain ethical threat (for example specifically when we explain why such an action leads to self interest threat), will we be able to get 1 mark for either explanation of why self interest arises or do we have to include both sentences ?
This is about where Russell holds shares of the Wire Co and have not deposed even after joining the Bunk&Co.
” such actions can inappropriately affect the Russell’s judgement / behavior ”
or
” Russell would like to maximize his earnings by communicating to other engagement partner who review the FS of Wire Co.
2. For example it’s common for us to say those charged with governance, financial statements and etc other long words.
Therefore once i have mentioned “Those charged with governance” can i replace it as TCWG throughout the answer (assuming i have written “those charged with governance (TCWG)” ?
i’m worried if the marker might not award full marks due to using short form.
1. Don’t overthink it – a relevant point earns a mark. If there are two points in a sentence it will get 2 marks – but it’s better to keep the sentence structure simple and aim for each sentence to make a point. The 1st point you have noted is really too vague – what action? (Is it not inaction because he hasn’t disposed of the shares?) – what does “inappropriately affect” mean? This point doesn’t explain self-interest. That Russell may have maximised his earnings/return by holding on to the shares is more obviously a matter of self-interest but the reference to “other engagement partner who reviews …” is unclear – does it mean the audit engagement partner, Lester?
2. Yes that’s fine – these are some examples of generally acceptable abbreviations to use after writing in full – TCWG, SoFP, SoPL, PPE, MURGC, KAMs, OCI, NCI …
I personally don’t like FS but there’s no reason why you couldn’t use that too.
I just recommend that you don’t make up new ones.1. what i mean to say was that the question have stated Russel is not a member of the audit team ( that reviews Wire Co). However he will have the chance to talk to any of the audit partner who is reviewing the FS of Wire Co( given his status as an audit partner). In this way, he knows when to dispose when to sell his shares of Wire Co.
Does it mean that i must explain why such action leads to ethical threat in this detail to get 1.5 mark ? ( i’m just curious because i may not have sufficient time to explain in such great detail in the exam)
(At AAA, take care with use of the word “review” as review assignments are not audit assignments.) Yes I agree:
“In talking to Lester/ the audit engagement partner, Russell might have obtained information that had a bearing on when he sold his shares.” – that’s enough for 1 mark.
It was you who posed your initial question in the context of self-interest threat – I was only point out that the points that followed did not convey it.
“Russell’s shareholding in Wire was a direct financial interest that created a self-interest threat to objectivity” – that’s enough for 1 mark
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