You are part of the audit team at DDD Partners, tendering for the audit of Water Fun

Question:

You are part of the audit team at DDD Partners, tendering for the audit of Water Fun for the 2015 financial year. During your review of an Australian Securities and Investments Commission (ASIC) company extract for Water Fun, you note that DDD holds an interest in Water Fun. The interest is material to DDD.


Required

(a) What is the threat to compliance with the fundamental principles?

(b) Explain whether any safeguards could be put in place to reduce the threat to an acceptable level.

(c) Would it make any difference to your answers if the shares were held by a tax partner in the office, rather than being held directly by DDD?

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Auditing A Practical Approach

ISBN: 9780730364573

3rd Edition

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton

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