Regional insurance partners (RAP) is a three partner audit and assurance firm based in Sydney. The three partners are bob, Ralph and Shelly. RAP has been appointed as auditor of exquisite accessories limited(EAI) a metal processing firm. This is the first year that RAP is undertaking the EAL audit

A. The CEO of EAL is David Jones. David’s wife is a well know jewellery designer who frequently produces pieces for fashion shows and other high profile medial events. David has been vocal about his wife successful jewellery business and has offered to source some exclusive and limited editions piece for the audit firms

B. Owen Jackson, the CFO of EAL and bob have been friends for many years. Their families usually go on holiday together once a year and they frequently socialised with one another. Bob rates owns very highly as a CFO and he is confident that Owen will cooperate with the auditors

C. Elspeth o keefe a new audit manager at RAP was previously employed by EAL, and she prepared the EAL financial reports for the period under audit

Questions:

A. For the first scenario identify one threat to independence for RAP and state one action RAP needs to implement to eliminate or reduce the threat to acceptable level

B. For the second scenario identify one threat to independence for RAP and state one action RAP needs to implement to eliminate or reduce the threat to acceptable level

C. For the third scenario identify one threat to independence for RAP and state one action RAP needs to implement to eliminate or reduce the threat to acceptable level

Answer rating: 100% (QA)

A One threat to independence for RAP is that the auditors of RAP may be made to make wrong statements in the financial reports of EAI as David is prov... View the full answer