I'm sitting for P7 for the first time, and while attemping the ethics questions I am not sure whether to use the 7-step model to tackle the questions as rcommended by the AAA (American Accounting Association).
The below links are a question and answer that I have attempted.
Any suggestions on how can I improve my answer or on any corrections that you may notice are more than welcome.
You have to identify the threat and give the reason why the threat has risen (i.e. describe the threat & give reason why it is a threat) for example "cross selling non audit services as instructed by the senior partner may give rise to self interest threat as selling the service represents the finance interest to the audit firm but objectivity and quality of audit work performed by the junior may be compromised as they will concentrate on selling the service rather than the audit engagement.
You proceed to evaluate the significance of the threat- please follow what the question scenario may contain the statement " for the firm to sell non audit services, the senior partner has included number of services to be sold in the performance agreement for the junior auditors" and this should be part of your evaluation.
You should apply relevant safeguard to reduce the threat to acceptable level. for example the performance should not be attached to cross selling the service.
and finally you close wit conclusion.