You work for a firm of accountants and auditors which has eight partners. The audit firm has been invited by the Managing Director (MD) and majority shareholder of Akobam Co, to accept appointment as statutory auditor of the company, replacing the current firm of auditors who will not be re-appointed. The principal activity of Akobam Co is the manufacture and distribution of healthcare products. Your firm has several companies operating in the healthcare sector and its client portfolio. The MD of Akobam has requested that your firm assists with the preparation of the company’s tax computation, and provides consultancy services on an ongoing basis in connection with his plans to grow the business. The MD has also suggested that a partner in your firm joins the board of Akobam Co as a non-executive director.

Required:

Identify and explain the threats to independence and objectivity which may arise from the provision of the services requested by the Akobam Co.  MD, and state how these threats should be resolved or mitigated.

Explain to the MD of Akobam the difference between Statutory and Non Statutory audit.

State two qualifications and four disqualifications for the appointment of an auditor to Akobam Co.

Answer rating: 100% (QA)

Auditors are expected to provide an unbiased and professional opinion on the work that they audit An auditor who lacks independence virtually renders their accompanying auditor report useless to those ... View the full answer