Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Case Study You are the audit manager of Jones & Co and you are planning the audit of LV Fones Co, which has been an

Case Study

You are the audit manager of Jones & Co and you are planning the audit of LV Fones Co, which has been an audit client for four years and specializes in manufacturing luxury mobile phones. During the planning stage of the audit, you have obtained the following information. The employees of LV Fones Co are entitled to purchase mobile phones at a discount of 10%. The audit team has, in previous years been offered the same level of staff discount. During the year, the financial controller of LV Fones was ill and hence unable to work. The company had no spare staff to fulfil the role and hence a qualified audit senior of Jones & Co was seconded to the client for three months. The audit partner has recommended that the audit senior work on the audit as he has good knowledge of the client. The fee income derived from LV Fones, was boosted by this engagement and along with the audit and tax fee, now accounts for 16% of the firm's total fees. From a review of the correspondence files, you note that the partner and the finance director have known each other socially for many years and in fact went on holiday together last summer with their families. As a result of this friendship the partner has not yet spoken to the client about the fee for last year's audit, 20% of which is still outstanding.

Required:

1. Explain two ethical threats, which may affect the independence of Jones & Co's audit of LV Fones Co.

2. For each threat, explain how the it can be avoided.

3. Critically evaluate the role of audit committees towards good corporate governance.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Accounting Principles

Authors: John Wild, Ken Shaw, Barbara Chiappetta

19th Edition

0077303202, 9780077303204

More Books

Students also viewed these Accounting questions

Question

What committees does the person serve on?

Answered: 1 week ago

Question

Give some contrasting views for work from home

Answered: 1 week ago

Question

find all matrices A (a) A = 13 (b) A + A = 213

Answered: 1 week ago