QUESTION THREE

You are the audit manager of Excel & Co. and NO FEARS LTD, an importer and distributor of medical equipments is one of your clients. You have been the audit manager and Madam Der the audit partner over the past eight years without any changes.

You were contacted by the management of NO FEARS ltd to prepare the previous years financial statements and are counting on your for the preparation of this years financial statements.

Yelley, the brother-in-law of Madam Der also works in the accounting department of the client as well as the Mr kooton, a good friend of Madam Ders boss has been appointed as a non executive member on the audit committee of NO FEARS Ltd.

The client who just got listed on the Ghana Stock Exchange has allocated shares to the audit manager in appreciation for his assistance in getting the company listed.

The client has engaged the services of a personnel from the audit team to assist with tax planning and promises pay him 10% of the tax savings and allot 500 shares to him if he is able to help the company win a tax dispute with the Ghana Revenue Authority.

Required

Identify and Explain the threats the are likely to affect the independence and objectivity of the auditor of NO FEARS Ltd. (12 Marks)