The following are examples of situations in which Carnation and Co, an audit firm with 50 similar medium sized audit clients, which are non listed might need to implement safeguards in order to protect its independence.

For each situation suggest select the most appropriate safeguard:

• Separate Personnel
• Discuss the issues with the audit committee
• No safeguards possible

or state that there are no safeguards that could reduce the risk to an appropriate level.

1. Carnation and Co have been invited to accept the audit of a major listed company. The fee income from this agreement would represent 55 of the gross fee income of the firm.

2. Carnation and co has been invited to accept the audit of a major competitor of an existing client and has obtained consent from both to act.

Answer rating: 100% (QA)

Provision as per SelfRegulatory Measures Ceiling on the Fees A member should as far as possible take ... View the full answer