Write answers to each of the five (5) situations described belowaddressing the required criteria (i.e. 1 & 2) in eachindependent case. You may use a tabulated format if helpful havingâThreatsâ, âSafeguardsâ and âObjective Assessmentâ as columnheadings.
Bret Hart has been appointed as a junior auditor of Black &White (BW). One of his first tasks is to review the firmâs auditclients to ensure that independence requirements of APES 110 (Codeof Ethics for Professional Accountants) are being met. His reviewhas revealed the following:
a- Neptune Limited is one of BWâs audit clients. Mark is apartner in BW and practices in the same office as Bruce, who is thelead engagement partner for the Neptune Limited audit. Mark is notinvolved in the Neptune Limited audit himself. Markâs wife Michelleowns shares in Neptune Limited.
b- Mariah Parker is an assurance manager with BW and it has justbeen decided to allocate her to the audit of Organic Foods Limited(OFL). Mariahâs financially independent daughter, Juliette, hasrecently purchased a very large parcel of shares of significantvalue in OFL
c- BW has recently been approached by Pixcom Limited (PL) toconduct its audit. The accountant at PL, Charlotte Flair, is thedaughter of Ric Flair, who is one of the audit partners at BW.Being aware of Ricâs relationship with Charlotte, BW will not beassigning Ric to the audit team of PL.
Required: For each of the independent situations above, andusing the conceptual framework in APES 110 (Code of Ethics forProfessional Accountants), answer the following questions:
1. Identify potential threat(s) to independence & recommendsafeguards (if any) to reduce the independence threat(s)identified
2. Provide an objective assessment of whether audit independencecan be achieved
Write answers to each of the five (5) situations described belowaddressing the required criteria (i.e. 1 & 2) in eachindependent case. You may use a tabulated format if helpful havingâThreatsâ, âSafeguardsâ and âObjective Assessmentâ as columnheadings.
Bret Hart has been appointed as a junior auditor of Black &White (BW). One of his first tasks is to review the firmâs auditclients to ensure that independence requirements of APES 110 (Codeof Ethics for Professional Accountants) are being met. His reviewhas revealed the following:
a- Neptune Limited is one of BWâs audit clients. Mark is apartner in BW and practices in the same office as Bruce, who is thelead engagement partner for the Neptune Limited audit. Mark is notinvolved in the Neptune Limited audit himself. Markâs wife Michelleowns shares in Neptune Limited.
b- Mariah Parker is an assurance manager with BW and it has justbeen decided to allocate her to the audit of Organic Foods Limited(OFL). Mariahâs financially independent daughter, Juliette, hasrecently purchased a very large parcel of shares of significantvalue in OFL
c- BW has recently been approached by Pixcom Limited (PL) toconduct its audit. The accountant at PL, Charlotte Flair, is thedaughter of Ric Flair, who is one of the audit partners at BW.Being aware of Ricâs relationship with Charlotte, BW will not beassigning Ric to the audit team of PL.
Required: For each of the independent situations above, andusing the conceptual framework in APES 110 (Code of Ethics forProfessional Accountants), answer the following questions:
1. Identify potential threat(s) to independence & recommendsafeguards (if any) to reduce the independence threat(s)identified
2. Provide an objective assessment of whether audit independencecan be achieved
