The following question is taken from the June 2011 F8 Paper – Audit and Assurance of the ACCA. We are only asking you to consider requirement

(a) of the question.

You are an audit manager in NAB & Co., a large audit firm which specializes in the audit of retailers. The firm currently audits Goofy Ltd, a food retailer, but Goofy Ltd’s main competitor, Mickey Ltd, has approached the audit firm to act as auditors. Both companies are highly competitive and Goofy Ltd is concerned that if NAB & Co.

audits both companies then confidential information could pass across to Mickey Ltd.

Required:

(a) Explain the safeguards that your firm should implement to ensure that this conflict of interest is properly managed.