ACCA Audit and Assurance (F8) Practice Exam

When a firm's total fees from a client exceed 15% of the firm's total fees for two consecutive years, the firm is required to disclose this information to those charged with governance. This requirement stems from the need for transparency and maintaining the integrity of the audit process. By informing governance, the firm allows the client to assess any potential threats to independence or objectivity that might arise from the significant fees.

This action promotes good governance practices and fosters trust between the auditor and the client, ensuring that all parties are aware of the financial relationship involved. It also enables those charged with governance to take appropriate measures if necessary, which can include evaluating the auditor's independence or considering the implications for the audit or review services.

The other options do not address the critical requirement for disclosure of the fee arrangement, which is rooted in the principles of transparency and professional responsibility.