You are the audit senior of Ahamed & Partners an audit firm based in Muscat and...

 

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You are the audit senior of Ahamed & Partners an audit firm based in Muscat and have been assigned to the audit of Salalah Beaches Co, a listed company which has been an audit client for 8 years. They specialize in swim, surfing, and paddle boarding equipment. Mr. Nasser al harthy was the engagement partner for Salalah Beaches Co and, as he had completed seven years as the audit engagement partner, has now been rotated off the assignment. The current audit partner, Ali said al harthy, has suggested that Mr. Nasser should take the role as independent review partner this year, to maintain the close working relationship. In addition, Salalah Beaches Co have requested that Mr. Nasser sit on the board as a non-executive director to enhance their finance skills within the organization. The audit manager, not previously involved in the audit for Salalah Beaches Co, has recently declared that he has shares in Salalah Beaches Co. The total fees received last year from Salalah Beaches Co are 17% of the firm's total fee income. This year's audit fee has not been confirmed, but along with tax and other services, it could be greater than previous years. A significant proportion of last year's audit fee remains outstanding. The finance director of Salalah Beaches Co has informed the audit engagement partner that when the audit is complete, he would like the whole team to provide a luxury lunch in a five-star hotel at Salalah. Required: Using the information above: (i) (ii) Identify and explain any Four ethical threats which may affect the independence of Ahamed & Partners audit of Salalah Beaches Co: and For each threat, explain how it could be reduced to an acceptable level. You are the audit senior of Ahamed & Partners an audit firm based in Muscat and have been assigned to the audit of Salalah Beaches Co, a listed company which has been an audit client for 8 years. They specialize in swim, surfing, and paddle boarding equipment. Mr. Nasser al harthy was the engagement partner for Salalah Beaches Co and, as he had completed seven years as the audit engagement partner, has now been rotated off the assignment. The current audit partner, Ali said al harthy, has suggested that Mr. Nasser should take the role as independent review partner this year, to maintain the close working relationship. In addition, Salalah Beaches Co have requested that Mr. Nasser sit on the board as a non-executive director to enhance their finance skills within the organization. The audit manager, not previously involved in the audit for Salalah Beaches Co, has recently declared that he has shares in Salalah Beaches Co. The total fees received last year from Salalah Beaches Co are 17% of the firm's total fee income. This year's audit fee has not been confirmed, but along with tax and other services, it could be greater than previous years. A significant proportion of last year's audit fee remains outstanding. The finance director of Salalah Beaches Co has informed the audit engagement partner that when the audit is complete, he would like the whole team to provide a luxury lunch in a five-star hotel at Salalah. Required: Using the information above: (i) (ii) Identify and explain any Four ethical threats which may affect the independence of Ahamed & Partners audit of Salalah Beaches Co: and For each threat, explain how it could be reduced to an acceptable level.

Answer rating: 100% (QA)

1 Self Interest Threat The audit manager has shares in Salalah Beaches CoHoldingshares in a client i... View the full answer