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ACC300 Auditing And Assurance Services

tag 0 Download 4 Pages / 908 Words tag 13-07-2021


The following are separate situations where the independence of the Auditor is subject to threat.You are asked to identify the name of the threat to the Auditor’s independence and briefly explain why it is a threat
(a) Leona Ng ,the Senior Accounts Manager ,from Jenkins Ltd has fallen ill and will need replacing for the next four months.Your accounting firm,Thornleigh Accountants has been asked to supply a staff member on secondment until Leona Ng returns. Your firm has supplied Jane Davis and she finished up after four months in mid May .Your firm is going to do the audit of Jenkins Ltd from mid July and intend to use Jane Davis as part of the audit team.

(b) John Darrow ,the Audit Manager of the Darrow Associates Accountants, has just received the accounts from Winmalee Ltd. This has taken an optimistic approach to the valuation of development expenditure capitalised in intangible assets. The senior staff bonuses are all related to the firm’s profit performance and Winmalee have provided paper copies of details taken from various accounting standards,as well as computer files with reports which are sympathetic to their approach to valuation of these assets.

(c) The Chocolate company has asked your firm to carry out the audit of its financial statements. It also has invited your firm to visit its seconds chocolate shop where defective chocolates are sold at a considerable discount prior to completing the audit. The Chocolate company has invited members of your firm to join the Chocolate company’s social club.

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