The CFO of the SA informed the auditor that one of the independent non-executive directors had...

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The CFO of the SA informed the auditor that one of the independent non-executive directors had resigned. This member was also a member of the Audit Committee. He therefore asks the audit firm for assistance in finding a suitable replacement. A proposal by the Chief Financial Officer that the auditors' fees should be a percentage of the pre-tax profit is pending before the Audit Committee. The audit firm additionally provides tax services to a e for the completion of its tax return along with tax planning proposals. Finally, 20% of last year's audit fee has become due 3 months ago and has still not been paid. 1) Identify and explain 5 risks to the independence of the audit firm and its members regarding the audit of the SA. 2) For each risk, suggest a remedy to reduce the risk to an acceptable level. The CFO of the SA informed the auditor that one of the independent non-executive directors had resigned. This member was also a member of the Audit Committee. He therefore asks the audit firm for assistance in finding a suitable replacement. A proposal by the Chief Financial Officer that the auditors' fees should be a percentage of the pre-tax profit is pending before the Audit Committee. The audit firm additionally provides tax services to a e for the completion of its tax return along with tax planning proposals. Finally, 20% of last year's audit fee has become due 3 months ago and has still not been paid. 1) Identify and explain 5 risks to the independence of the audit firm and its members regarding the audit of the SA. 2) For each risk, suggest a remedy to reduce the risk to an acceptable level.

Answer rating: 100% (QA)

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