Description

ETHICS

The objectivity of external auditors may be threatened or appear to be threatened in the following circumstances:

a)      The audit firm is heavily financially dependent on one significant client;

b)      The audit firm, its partners or staff have a financial interest in the audit client;

c)      There are family relationships between the firm, its partners, staff and the audit client;

d)      The audit firm provides non-audit services to the audit client;

e)      The audit firm has been the external auditor of the client for the past 10 years.

Requirement:

1)            Define independence and objectivity as they apply to an auditor.............(10 Marks)

2)            Discuss the importance of auditor independence in the auditor-client relationship ………........................................................................................................(10 Marks)

3)            For each of the five circumstances (a) - (e) above, explain the type of threat it creates and analyse the possible consequences of such threats to the conduct and outcome of the audit…..................................................................................................(50 Marks)

4)            Recommend the steps to be taken by the audit firm to reduce the threat to the auditors objectivity for each of the above circumstances (a) - (d).............................(15 Marks)

Appropriate and professional presentation of assignment……………………………(5 Marks)

o   Signed assignment submission sheet

o   Word document, Times New Roman, Font size 12, 1.5 line spacing

o   Contents page

o   Introduction

o   Main body (Answers to 1), 2) & 3))

o   Conclusion

o   List of references

o   Headers/ footers/ page numbers

Appropriate presentation of assignment correctly referenced using the Harvard Referencing System……………………………………………………………………………...(10 Marks)

                                                                                                                       (Total 100 Marks)