ABS and Partners, a medium-sized accounting practice with 54 partners, has been invited by the directors...
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ABS and Partners, a medium-sized accounting practice with 54 partners, has been invited by the directors of Star-Fruit and Co to accept appointment as their external auditor. Star-Fruit and Co is a family owned business, owned by Mr. and Mrs. Apple who are the two directors. The company has 122 employees and its revenue for the year ended 30 November 2019 is £27m. The directors have asked if ABS and Partners could provide the following non- audit services Assistance with purchasing an off-the-shelf stock control system, to include recommendations and implementation of an accounting package, as the directors are confused by the choice available; Assistance with the recruitment of a Chief Finance Officer (CFO) and loan a member of staff from ABS and Partners to train the CEO; and Advice on the remuneration package of the prospective CFO Required: a) Identify and explain the principal threats to independence which may arise from the provision of the non-audit services requested by the directors of Star-Fruit. (15 marks) b) Recommend possible safeguards the auditors can take to reduce these potential threats. ABS and Partners, a medium-sized accounting practice with 54 partners, has been invited by the directors of Star-Fruit and Co to accept appointment as their external auditor. Star-Fruit and Co is a family owned business, owned by Mr. and Mrs. Apple who are the two directors. The company has 122 employees and its revenue for the year ended 30 November 2019 is £27m. The directors have asked if ABS and Partners could provide the following non- audit services Assistance with purchasing an off-the-shelf stock control system, to include recommendations and implementation of an accounting package, as the directors are confused by the choice available; Assistance with the recruitment of a Chief Finance Officer (CFO) and loan a member of staff from ABS and Partners to train the CEO; and Advice on the remuneration package of the prospective CFO Required: a) Identify and explain the principal threats to independence which may arise from the provision of the non-audit services requested by the directors of Star-Fruit. (15 marks) b) Recommend possible safeguards the auditors can take to reduce these potential threats.
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Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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