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You are the audit partner in RSA Partners (RSA). RSA is a large accounting firm based in Melbourne. In August 2020, RSA intended to accept
You are the audit partner in RSA Partners (RSA). RSA is a large accounting firm based in Melbourne. In August 2020, RSA intended to accept a new client, Galaxy Glass Ltd (Galaxy). Galaxy is one of Australia’s leading glass manufacturers engaging in the production of float glass, automobile glass and construction glass.
Prior to the acceptance of Galaxy as a new client, you decided to do some investigation and found the following information:
- David Jackson, the junior auditor at RSA who is currently in the audit team for Galaxy, owns Galaxy shares worth only $200. However, David claimed that the shares are not material to him.
- In July 2020, RSA was employed by Galaxy to investigate the value of one of its patents. The patent was acquired following Galaxy’s acquisition of another glass manufacturer. This patent is considered as material intangible asset to Galaxy.
- The CFO of Galaxy, Susan White, is a close friend with your wife. They usually go shopping together during weekends. However, you are not very close to Susan.
- Besides threats to auditor independence, list three matters that should have been considered before accepting new clients.
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