According to the Code of Ethics for Professional Accountants, members of audit teams and firms should...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
According to the Code of Ethics for Professional Accountants, members of audit teams and firms should be independent of their audit clients. Independence requires both independence of mind and independence in appearance. The objectivity of the independent auditor may be threatened or appear to be threatened where: (i) The chairman of the board of directors of an audit client has invited the partner in-charge of the audit of that client to join the board as an independent non-executive director; (ii) The audit manager in-charge of the audit has just married to William. William is a shareholder of the audit client. Although William is holding 18% of the outstanding ordinary shares of the audit client, William does not involve in the operation of the audit client; (iii) The major shareholder of an audit client and the partner in-charge of the audit of that client have established a joint venture to provide financial services in Singapore. Required: For each of the three independent situations given above, explain why the independence of the external auditor may be threatened, or appear to be threatened. Also describe the safeguards that can eliminate or reduce the threats to independence to an acceptable level. According to the Code of Ethics for Professional Accountants, members of audit teams and firms should be independent of their audit clients. Independence requires both independence of mind and independence in appearance. The objectivity of the independent auditor may be threatened or appear to be threatened where: (i) The chairman of the board of directors of an audit client has invited the partner in-charge of the audit of that client to join the board as an independent non-executive director; (ii) The audit manager in-charge of the audit has just married to William. William is a shareholder of the audit client. Although William is holding 18% of the outstanding ordinary shares of the audit client, William does not involve in the operation of the audit client; (iii) The major shareholder of an audit client and the partner in-charge of the audit of that client have established a joint venture to provide financial services in Singapore. Required: For each of the three independent situations given above, explain why the independence of the external auditor may be threatened, or appear to be threatened. Also describe the safeguards that can eliminate or reduce the threats to independence to an acceptable level.
Expert Answer:
Answer rating: 100% (QA)
Heres an explanation of the threats to independence and potential safeguards for each situation Situation i Threat to Independence Selfreview threatTh... View the full answer
Related Book For
Auditing and Assurance Services A Systematic Approach
ISBN: 978-1259162343
9th edition
Authors: William Messier, Steven Glover, Douglas Prawitt
Posted Date:
Students also viewed these accounting questions
-
Explain the meaning of the terms emoluments, employments and office for the purposes of PAYE as you earn systems. 2. Explain the actual receipts basis of assessing the emoluments from the employment...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
M1 is a way to measure... a) the level of bank reserves b) a country's money supply c) the level of savings in a country d) a country's economic potential
-
A seven-month note dated November 1, 2019, earning interest at 7.5%, has a maturity value of $6000. Find the face value of the note.
-
Practice evaluating the results of attributes sampling by using the tables in Exhibit 8.6 and the following combinations of inputs. Assume the tolerable deviation rate is 12%. For each item labeled...
-
Consider the multiple linear regression model fit to the baseball data in Problem 3.41. Problem 3.41 Consider the 2016 major league baseball data in Table B.22. While team ERA0 was useful in...
-
Mr. K, a risk- neutral investor, is contemplating a one- year 8% loan of $ 500 to firm J. Mr. K demands at least a 6% expected return per annum on loans like this. K is concerned that the firm may...
-
Metropolis Health System (MHS) has received a wellness grant from the charitable arm of an area electronics company. The grant will run for 24 months, beginning at the first of the next fiscal year....
-
Quantitative Problem: Sunshine Smoothies Company (SSC) manufactures and distributes smoothies. SSC is considering the development of a new line of high-protein energy smoothies. sSC's CFO has...
-
Write an html program that has a paragraph to explain items. After the paragraphs, make a numbered list of the items. The pages should have a background color of your choice. The page should also...
-
An agreement based on the uncertain outcome of some future event. a. champerty b. franchisee c. franchisor d. gambling agreement e. government-granted franchise f. interest g. monopoly po wer h....
-
How is a credit default swap like insurance?
-
What is outsourcing?
-
Indicate whether each of the following statements is true or false by writing T or F in the answer c olumn. A contract ratifi cation must apply to the entire contract.
-
Describe the relationship between production scheduling and inventory levels.
-
Komuga Sdn Bhd specializes in producing Burned Japanese Cotton Cheesecake. The following information relates to the variable production cost of making a unit of the cake: RM Direct material 35 Direct...
-
Is it ethical to provide safety training in English to immigrant workers who speak little English, in order to reduce costs?
-
List and define the audit procedures for obtaining audit evidence.
-
A walkthrough involves tracing a transaction through the information system. What types of evidence does a walkthrough provide to the auditor?
-
Why does an auditor obtain a cutoff bank statement when auditing a bank account? What information is examined on the canceled or substitute checks returned with the cutoff bank statement?
-
Find one solution for each of the difference equations below: (a) \(y(n)+2 y(n-1)+y(n-2)=0, y(0)=1\) and \(y(1)=0\) (b) \(y(n)+y(n-1)+2 y(n-2)=0, y(-1)=1\) and \(y(0)=1\).
-
We define the even and odd parts of a sequence \(x(n), \mathcal{E}\{x(n)\}\) and \(\mathcal{O}\{x(n)\}\) respectively, as \[\begin{aligned}\mathcal{E}\{x(n)\} & =\frac{x(n)+x(-n)}{2}...
-
Find the general solution for the difference equation in Example 1.9 when \(a=b\). Example 1.9. Solve the difference equation y(n) + ay(n 2) = b" sin(n)u(n) assuming that ab and y(n) = 0, for n < 0....
Study smarter with the SolutionInn App