Auditing

Write answers to each of the five (5) situations described below addressing the required criteria (i.e. 1 & 2) in each independent case. You may use a tabulated format if helpful having Threats, Safeguards and Objective Assessment as column headings. Tom Hardy has been appointed as a junior auditor of Awesome Chartered Accountants (ACA). One of his first tasks is to review the firms audit clients to ensure that independence requirements of APES 110 (Code of Ethics for Professional Accountants) are being met. His review has revealed the following:

(b) Tech Grand Savers Ltd (TGS) has not paid any of its audit fees for the last three years to ACA, citing cash flow problems. This has resulted in a significant amount of overdue audit fees for ACA. The audit partner in charge, John Wick has been reluctant to push the issue further, as TGS is a high profile client who he wishes to retain.

For each of the independent situations above, and using the conceptual framework in APES 110 (Code of Ethics for Professional Accountants), answer the following questions: 1. Identify potential threat(s) to independence & recommend safeguards (if any) to reduce the independence threat(s) identified. (5 marks) 2. Provide an objective assessment of whether audit independence can be achieved (5 marks) (Total 10 Marks)