DEPARTMENT OF ACCOUNTING BAAF 403 AUDIT AND ASSURANCE CLASS ASSIGNMENT 28th November, 2021 ASSIGNMENT 5 It has been suggested that the most important matter affecting the credibility of the auditor is that of 'independence' Required Comment on the following situations in the context of the independence of the auditor, showing clearly the threats involved and the safeguards required by the IESBA Code of Ethics for Professional Accountants: a) The audit manager in charge of the audit assignment of Scott holds 1,000 GHC1 ordinary shares in the company (total shares in issue - 100,000). The audit partner holds no shares. b) An audit partner of a firm of Chartered Accountants is a personal friend of the chief accountant of Peters Ltd. The chief accountant is not a director of the company and the partner is not responsible for the audit of Peters Ltd. c) The audit fee for Freya, a listed company, is GHC 175,000. The total fee income of the audit firm is GHC 700.000 d) The audit senior in charge of the audit of Green a bank, has a personal loan from the Green Bank of GHC 2,000 on which he is currently paying a market rate of interest, e) An audit partner is responsible for two audit assignments: Pepper and Tomato. Pepper has recently tendered for a contract with Tomato for a supply of material quantities of goods over a number of years. Tomato has asked the audit partner to advise on the matter. 20 marks GH Mobiles has been an audit client for eight years and Sophie Co has provided audit, taxation and management consultancy advice during this time. The client has been satisfied with the services provided, although the taxation fee for the period to 30 June 2020 remains unpaid Audit personnel available for this year's audit are most of the staff from last year, including Mr. Campbell, an audit partner and Mr. Ron, an audit senior. Mr. Campbell has been the audit partner since GH Mobiles became an audit client. You are aware that Elizabeth Campbell, the daughter of Mr. Campbell, has recently been appointed the financial director at GH Mobiles. To celebrate her new appointment, Elizabeth has suggested taking all of the audit staff out to an expensive restaurant prior to the start of the audit work for this year. Required: a) Explain the situations where an auditor may disclose confidential information about a client. b) Identify and explain the risks to independence arising in carrying out your audit of GH Mobiles for the year ending 31 December, 2020 and suggest ways of mitigating each of the risks you identify 20 marks Submission date 11th December, 2021