audit homework

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  • Topic: Family, Audit, John Grisham
  • Pages : 4 (1060 words )
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  • Published : January 23, 2014
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Objective Assessment
The lending of staff by the firm to an audit client may create a self-review threat.
Referring to APES110,290 142, it states that if the firm lend the staff to audit client, and it will create the self-review threat. The possible safeguards are as following:

Pay more attention on the work done by the loaned staff while in audit engagement. Do not assign any audit responsibility to the task that is performed by that loaned staff. Remove the loaned staff from engagement team,

Wendy is the partner in the engagement team of KPG, and hence she has significant influence on managing the auditing tasks such as examining relevant accounting record before expressing auditing opinion. However, the she had taken the employment position (company secretary) that has significant involvement on maintaining accounting record for about 6 months. The best way to reduce the threat is to remove Wendy from engagement team. But it is still accepted if she participates in audit engagement by not giving her any audit responsibility about the work she did, and other member need to pay more attention on the work that have been done by Wendy. b)

The self-interest threat would be created if other partners and managerial employees who provide non-audit services to the audit client or the immediate family member of those persons have direct financial interest or material indirect financial interest toward audit clients.

The self-interest threat can be discarded if the non-audit services have minimal effects on audit engagement.

APES110.290.110 illustrates that only with the non-assurance service that has minimal effects on the audit service, and the immediately family members of partners and managerial employees who carry on non-audit service has no direct financial interest or immaterial indirect financial interest, otherwise the self-interest would be created. This type of threat is so...
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