ACCT3000 Auditing Assurance And Risk Assessment :Stephen Taylor has been appointed as a junior auditor of Simnett Chartered Accountants

Write answers to each of the five (5) situations described below addressing the required criteria (i.e. 1 & 2) in each independent case. You may use a tabulated format if helpful having “Threats”, “Safeguards” and “Objective Assessment” as column headings.

Stephen Taylor has been appointed as a junior auditor of Simnett Chartered Accountants (SCA). One of his first tasks is to review the firm’s audit clients to ensure that independence requirements of APES 110 (Code of Ethics for Professional Accountants) are being met. His review has revealed the following:

• SCA has been providing its audit client Kaplan Limited (Kaplan) with non-audit services for a number of years. Andrew Ferguson is SCA’s partner in charge for providing non-audit services to Kaplan. While having a conversation with Andrew, Stephen becomes aware that Andrew’s wife Michelle Ferguson is planning to purchase a significant number of shares in Kaplan.
• Duxton Motels Limited (DML) is a chain of ten motels operating in Western Australia and is one of the oldest companies listed on the Australian Securities Exchange. SCA performs audit work for DML. This is the second year that SCA’s total fee from DML will comprise of around 20% of SCA’s total fee revenue from all clients.
• Super Tech Limited (STL), an Australian IT company, has not paid any of its audit fees for the last three years to SCA, citing cash flow problems. This has resulted in a significant amount of overdue audit fees for SCA. The audit partner in charge, Grant Richardson has been reluctant to push the issue further, as STL is a high profile client who he wishes to retain.
• Gregory Taylor, an audit senior with SCA is very excited to be a part of the audit team of Jumbo Metals Limited (JML). Gregory feels that he will be a valuable asset to the audit team as his wife, Christina Taylor, is JML’s financial controller who is responsible for the preparation of JML’s financial report.
• SCA has recently accepted an engagement to provide audit services to Yummy Donuts Limited. Robert Durand is an audit partner at SCA. Robert’s wife Rebecca Durand currently works as a financial accountant at Yummy Donuts. Robert is not on the audit team of Yummy Donuts.

Required:

For each of the independent situations above, and using the conceptual framework in APES 110 (Code of Ethics for Professional Accountants), answer the following questions:

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

  Do you need high-quality Custom Essay Writing Services?