Beech AND CO - Assignment PDF

Preview

Summary

Assignment
...

Description

Beech and Co THREATS Familiarity threat Sandip and firm have been asked to recruit nonexecutive director. When firm is involved in recruiting senior employee for client, familiarity threat can arise. Proposal of Bethan to be member of board shows movement of staff between firm and its own client, this can also lead to familiarity threat.

SAFEGUARDS 



Firm cannot provide recruitment of client who exert significance influence over financial statements Perform quality control review of engagement

Advocacy threat Bethan who plays dual role in auditing, as independent review partner, and also assist at audit committee meeting can bring advocacy threat. He shall be negotiating and representing own client.



Bethan should not be engaged in the auditing process if he is likely to be taking sides of client



He shouldn’t be assigned to the audit of Beech and Co.

 

Having external quality control review Firm should disclose high fee dependency to the client. Do not perform any further work till the previous overdue fees are not paid. Remove one with potential employment with client

Intimidation threat the audit manager has decided to join the client, Willow Wands . Audit partner joining client can also bring up intimidation threat.

Self Interest Threat Fees dependency due to unpaid fees of three months shows self-interest threat. Along with this, audit manager was in possibility of getting employed at Willow Wands; this could have caused biasness in process of audit. Also, More than 16% of total firm is dependent on Willow Wands; this shows a high amount of fee dependency of firm on Willow wands

 

Self-Review Threat Bethan was audit engagement partner for seven years and as per Sandeep Pine if he undertook the role of audit review-partner he might not be fair as he might be reviewing his own work.



Bethan shouldn’t undertake the role of independent audit review partner....