SuperMart is one of Singapore's largest retailers with 64 stores located all across the island. SuperMart's chain stores are designed to provide customers with both "wet and dry" shopping options ranging from a wide assortment of live, fresh and chilled produce, such as seafood, meat, fruits and vegetables to packaged, processed, frozen and/or preserved food products as well as general merchandise, including toiletries and essential household products. Over the past decade, SuperMart has begun developing a selection of housebrands to offer its customers quality alternatives to national brands at substantial savings. To date, SuperMart has over 1,500 products under 23 housebrands (SuperMart Group 2021).

 

You are an audit manager in ABC LLP ("ABC"). ABC is an established professional accounting firm that provides audit, tax, and advisory services. 

 

For purposes of this assignment, assume that there is an impending change in the auditor of SuperMart, and ABC has been invited to tender for the financial statement audit of SuperMart.

Question :
To your knowledge, the reason for the change in auditor is because SuperMart's predecessor auditor has chosen not to stand for election for another year. In other words, the predecessor auditor did not seek re-election.

(a) Demonstrate four possible reasons why an auditor may choose not to stand for reelection. Apply your discussion to the context of SuperMart wherever possible.

(b) Your audit partner would like you to help prepare an audit proposal for the tender. One of the items to be included in the audit proposal is the audit fees. Indicate four  factors that the audit firm would have to consider when setting the audit fees. Apply your discussion to the context of SuperMart wherever possible.

Answer rating: 100% (QA)

a Four possible reasons why an auditor may choose not to stand for reelection are Loss of client The auditor may have lost the client due to a variety of reasons such as client going bankrupt merger w... View the full answer