Write an answer to the situation described below addressing the required criteria (i.e. 1 & 2) in
Question:
Write an answer to the situation described below addressing the required criteria (i.e. 1 & 2) in each independent case. You may use a tabulated format if helpful having “Threats”, “Safeguards” and “Objective Assessment” as column headings.
Christopher Brown has been appointed as a junior auditor of Apex Chartered Accountants (ACA). One of his first tasks is to review the firm’s audit clients (all public interest entities) to ensure that independence requirements of APES 110 (Code of Ethics for Professional Accountants) are being met. His review has revealed the following:
Michael, FCPA is an engagement partner at ACA. ACA has recently been appointed the auditor of Awesome Ferries Limited (AFL). AFL has been providing ferry services in Perth for the past 15 years. Michael has received a request to participate in the current year’s audit engagement of AFL. Michael’s financially independent daughter, Serena has a shareholding in AFL.
For each of the independent situations above, and using the conceptual framework in APES 110 (Code of Ethics for Professional Accountants), answer the following questions:
1. Identify potential threat(s) to independence & recommend safeguards (if any) to reduce the independence threat(s) identified.
2. Provide an objective assessment of whether audit independence can be achieved
Accounting Information Systems basic concepts and current issues
ISBN: 978-0078025334
3rd edition
Authors: Robert Hurt