You have replaced the former audit partner Brett of the auditing firm Moira & Stella (M&S). You find the following independent engagement is potentially in breach of the independence requirements of APES110. For the case below: Required: (i) Does a potential threat to audit independence exist in the circumstances? (1 mark) (il) Identify the single most significant type of potential threat. (1 mark) (ili) Give reason why it is a threat. (1 mark) (iv) Recommend a safeguard. (1 mark) (1) The former audit partner (Brett) of Moira & Stella (M&S) Pty Ltd, has been approached by the chairman of your client to serve as a director for the current year. The chairman believes that Brett's financial expertise will be valuable in assisting the company through some difficult times. The company's constitution requires each director hold a minimum of one hundred ordinary shares in the company. (4 marks) The chief accountant phones the audit partner of Moira & Stella (M&S) Pty Ltd at home to request a reduction in the audit hours shown on the draft audit plan, or they will seek a new auditor next year. (4 marks

Answer rating: 100% (QA)

Does a Potential Threat to Audit Independence Exist Yes a potential threat to audit independence e... View the full answer