- 5 Marks
AA – Aug 2022 – L2 – Q2a – Professional and Ethical Considerations
Discusses the threats to auditor independence and objectivity when transferring clients and possible safeguards.
Question
The Managing Partner of A & B Partners, Mr. Pumpa, has decided to put measures in place for the survival of the firm immediately after the enactment of the Company Act, 2019 (Act 992), which requires that “An Auditor shall hold office for a term of not more than six years and is eligible for re-appointment after a cooling-off period of not less than six years.”
Mr. Pumpa then had a gentle arrangement with his colleague, also a Managing Partner in C & D Associates, to transfer all clients who have exceeded their mandatory six years with A & B Partners and vice versa.
Required:
Discuss FIVE (5) major threats to the auditor’s independence and objectivity and how these inherent threats could be mitigated in the decision to transfer client C & D Associates.
(5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Auditor Independence, Client transfer, Safeguards, Threats to objectivity
- Level: Level 2
- Topic: Professional and Ethical Considerations
- Series: AUG 2022