AUDITING

Write answers to each of the five (5) situations described below addressing the required criteria in each independent case.

ANSWERS EACH QUESTION BY EXPLAINING THESE CRITERIAS a)Threats, b)Safeguards and c)Objective Assessment.

Bradley Cooper has been appointed as a junior auditor of Australian Silver Lining Accountants(ASLA). One of his first tasks is to review the firms audit clients to ensure that independencerequirements of APES 110 (Code of Ethics for Professional Accountants) are being met. Hisreview has revealed the following:

1) Sheldon is a Partner in ASLA who provides audit services to Easfarmers Limited(Easfarmers). Leonard is another Partner in ASLA who provides substantial non-auditservices to Easfarmers. Leonards wife Juliette is planning on purchasing significantshares in Easfarmers.

2) ASLA has recently accepted an engagement to provide audit services to BlueberryLimited (Blueberry). Rex Walsh is an Audit Partner at ASLA but is not involved with theaudit of Blueberry. Rexs daughter Michelle Walsh works as a Financial Accountant atBlueberry.

3) While having a conversation with Brock Lesnar, an Audit Senior at ASLA, Bradleylearns that Brock has been requested to perform Secretarial duties for Australian MineralsLimited (AML) for about six months. AML has been ASLAs audit client for a number ofyears. The long standing Company Secretary of AML, Mr Stephen Taylor has retired.Stephens role ranged from performing administrative duties to providing advice oncorporate governance. The Directors of AML anticipate that it would take about sixmonths to find a suitable replacement and in the meanwhile would like Brock to help.

4) The Founding Partner of ASLA, Mr. Clooney, has long operated a small proprietarycompany (NOT public interest entity), called AA Pty Ltd (AA). ASLA has performedthe annual audit of AA (as required by the companys constitution) for the past twoyears. ASLA performs tax calculations for AA for the purpose of preparingaccounting entries that are subsequently audited by ASLA.

5) Jeffery Stallone, the current Senior Manager on the audit of ADBC Ltd (ADBC) whichspecialises in the production of mining equipment, has just entered into a businessventure (Zoom Motors) with the CFO of ADBC, whereby they are both equal partnersin a business retailing motor vehicles. Jeffery has informed you that this is not aproblem since the 2 entities (ADBC and Zoom Motors) are in different noncompetingindustries.