You are an audit partner in a five-partner accounting firm which has a total fee income of £1.5 million from audit and other professional services. Your firm has a number of listed and non-listed clients. In each of the scenarios below, evaluate the implications for the independence of your firm, outlining actions to ensure the auditor’s independence is maintained:

A. The Engagement Partner in charge of the statutory audit of a financial institution client has recently taken a mortgage of £500,000 with them, taking advantage of a special deal offered.

B. Your other partners in the firm are exploring how your firm can remain profitable. Your firm has recently lost three major audit clients to other firms. Consequently, they have discussed two initiatives: Firstly to introduce a remuneration scheme where partners are paid bonuses for retaining audit clients and obtaining non-audit services from them; Secondly, to offer fee discounts to clients, linked to the length of time clients have been audited by their firm.

C. The Engagement Partner of an AIM listed client has been leading the statutory audit of the client for the past five years. The client’s management team has recently changed, with the Chief Executive Officer and the Chief Financial Officer both having left the company. Over a game of golf, the Chairman of the company has asked the Partner to remain as the Engagement Partner on the audit for another year

D. You have been put in charge of the statutory audit of a large private company and the annual audit fee are estimated to be in the region of £200,000. Additionally, the prospective client has signaled that they would like you to take on some non-audit work for them. 

Critically evaluate whether or not auditors should prioritise International Standards of Auditing over Ethical Standards or vice versa.