Michael has been approached by the CEO of an audit client and offered two tickets to the FIFA tournament during the Rio 2016 Olympic Games.The CEO knows that Michael's wife is from Rio and thought this was a nice way to thank him for twenty-years of excellent professional services.From an ethical perspective in deciding whether to accept the gift Michael should consider whether:
A)He has the time and money to travel to Rio for the games
B)Threats created by the gifts are at an acceptable level
C)The audit has been completed for the current year
D)Nonaudit services are also provided for the client

Question

Quizplus · Accepted Answer

Michael needs to consider the threats created by accepting the gift. As a professional auditor, receiving a gift from an audit client can create a self-interest or familiarity threat, which can compromise his independence and objectivity when conducting the audit. In this case, the CEO may be trying to influence Michael's behavior or judgments in favor of the client, and Michael needs to assess whether the value of the gift is significant enough to create such a threat. Even though Michael's personal relationship with his wife and her connection to Rio may make the gift more appealing, he should prioritize his professional duty to maintain his independence and avoid conflicts of interest. Therefore, he needs to evaluate whether the threats created by the gift are at an acceptable level, and if not, decline the invitation or disclose it to his firm's independence monitoring team. The other options are not relevant to the ethical considerations surrounding the acceptance of the gift.

Michael Has Been Approached by the CEO of an Audit