Hello can someone please help me in this question kindly provide me a well detai

Question

Hello can someone please help me in this question kindly provide me a well detailed answer and please see the question properly in bold below and apply it to the scenarios.

For the scenarios below, and making use of the conceptual framework in APES 110 (Code of Ethics for Professional Accountants):

1. Identify potential threat(s) to independence & recommend safeguards (if any) to reduce the independence threat(s) identified.

2. Provide an objective assessment of whether audit independence can be achieved

Samantha Major is the audit manager at Reign (an assurance company) and she has been allocated to audit Marthon Company. Her financially dependent son just used all her inheritance from her late father to buy shares at Marthon Company.

Reign an assurance company has been asked to conduct the audit of Apple Company. However the accountant at Apple Company, Sam coppers is the son of one of the audit partner of Reign Mathieu coppers. Since of the close relationship of Sam and Mathieu, Reign Company will not include Mathieu in the audit team of Apple Company.

Reign an assurance company has done the audit of the John Corps, a large proprietary company for three years. Reign has also given services in relation to accounting records and financial statements to John corps.

Reign (an assurance company) has decided to start the audit work of Blue print. Sarah coo will be the engagement partner for Blue print audit. Danny Kon who is also a partner at reign and sit in the same office as Sarah. Danny ‘s wife has purchased shares in blue print. Danny will not be involved in the audit of Blue Print.

Tobby limited has been an audit client of Reign Company since the past two years. Reign has recently reviewed the internal controls of Tobby limited. Tobby limited has requested Reign to implement a new software system that will be part of internal control over Tobby limited’s financial reporting process and run a three hour training session for its accosting staffs.

Explanation / Answer

1. In the above cases, the following threats to independence are identified

i. Self interest threat : since her relative has interest in the shares. no independence in auditing

ii. Self review threat : Since the client as a relation to be ignored and also the auditor has shown self interest to ignore in him.

iii Familiarity threat: Since the client has long relationship with the audit team which can affect their judgment

iv. Intimidation threat: Since there's Danny's wife purchasing the shares, the auditor is intimidated to ignore Danny in the audit.

v. Advocacy threat: Since the auditor is advising more than what he is to be done by conducting a training session for their accounting staff.

2.

Auditor's independence can be achieved by

i. Breaking up the financial relationships between the client and the auditor

ii. Proper scrutiny even the client is the former ones.

iii. Breaking up the family relationships between the client and the auditor during the audit process.

etc,.

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