You are the auditor for the Emily Partners, tending for the audit work of ABC company...

     

Transcribed Image Text:

You are the auditor for the Emily Partners, tending for the audit work of ABC company for the 2022 financial year. During our review of an Australian Securities and Investments Commission (ASIC) extract for ABC company, you note that Emily Partner holds an financial interest (i.e., the interest is material) in ABC company. Required: 1. Identify and Explain the significant threats to independence for Emily Partners in accepting the audit of ABC company (3 marks) 2. Explain whether any safeguards could be put in place to reduce the threat to an acceptable level. (2 marks) Part B: 3. Explain why independence is so essential for auditors. Explain the difference between "independence in mind" a "independence in appearance". (2 marks) 4. Classify each of the following items as either a self-interest threat, self-review threat, advocacy threat, familiarity threat, or intimidation threat? (3 marks) (1) The audit partner owns a significant amount of shares in the client company. (2) The audit firm is promoting a new issue of shares from the client company. (3) A member of the audit team was recently a director of the client company. You are the auditor for the Emily Partners, tending for the audit work of ABC company for the 2022 financial year. During our review of an Australian Securities and Investments Commission (ASIC) extract for ABC company, you note that Emily Partner holds an financial interest (i.e., the interest is material) in ABC company. Required: 1. Identify and Explain the significant threats to independence for Emily Partners in accepting the audit of ABC company (3 marks) 2. Explain whether any safeguards could be put in place to reduce the threat to an acceptable level. (2 marks) Part B: 3. Explain why independence is so essential for auditors. Explain the difference between "independence in mind" a "independence in appearance". (2 marks) 4. Classify each of the following items as either a self-interest threat, self-review threat, advocacy threat, familiarity threat, or intimidation threat? (3 marks) (1) The audit partner owns a significant amount of shares in the client company. (2) The audit firm is promoting a new issue of shares from the client company. (3) A member of the audit team was recently a director of the client company.

Answer rating: 100% (QA)

Part A 1 The significant threats to independence for Emily Partners in accepting the audit of ABC co... View the full answer