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An immediate family member of a CA in service is offered, outside the normal recruitment process, employment by a counterparty with whom the CA is negotiating a significant contract. What is the CA expected to do under the inducements rules in the Code?
AAdvise the family member not to accept, because a reasonable third party would conclude there is intent to improperly influence the CA
BResign from the negotiation immediately even if the family member declines the offer
CDisclose to the audit committee only if the family member accepts the role
DTreat the offer as personal to the family member with no professional consequences
Answer & Solution
Correct answer: A. Advise the family member not to accept, because a reasonable third party would conclude there is intent to improperly influence the CA
Where intent (actual or perceived by a reasonable and informed third party) to improperly influence behaviour exists, the CA must advise the family member not to offer or accept the inducement. Resignation from the engagement is not the first prescribed step; immediate advice to the family member is.
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