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Under the ICAI Code of Ethics, what is the underlying nature of a financial interest that a CA in service holds in his employing organisation, in terms of threat to fundamental principles?
AIntimidation threat arising from the employer's authority
BFamiliarity threat arising out of relationship with management
CSelf-interest threat to compliance with the fundamental principles
DAdvocacy threat arising out of promoting employer's position
Answer & Solution
Correct answer: C. Self-interest threat to compliance with the fundamental principles
Financial interests, profit-linked bonuses or share-options held by a CA or by an immediate/close family member create a self-interest threat — the personal stake gives the CA a motive to influence accounting in his own favour (Code of Ethics, Section D).
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