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can u please assist with the following :
1. How is family members work at audit client a self interest threat2. Is Employement with an audit client a self interest threat, self review threat or intimidation threat before the staff join the audit firm. Kindly explain
3. what are examples of assurance and non assurance services
4. When tendering for jobs,does the potential auditors have access to determine the scope of work needed in order to set the audit fees. kindly advise if this is so.
1. Independence issue since even if you are so fair with your audit, in the eyes of third party you can’t be independent.
2. Self review thread since he already know the weakness of the system he used to work in.
3. Assurance – External Audit , non-Assurance – compilation services
4. Tricky question and I think other might answer it better than me. I think potential auditors should be competent and capable enough to determine enough that they manage to judge and estimate their resources consumption against it.1. More like familiarity threat, i will be too sympathetic to my brother and therefore will make a judgement to his interest instead.
I also will be less scepticism to my brother because i know he is a good lad. (But you can’t do this for audit)
Also, consider if it is your father, it will be intimidation threat. (It is true if it was my father, lol) so i will be under pressured and therefore my objectivity is impaired.2. Employment is self review, because if i work with my audit client, then i will be reviewing my own work. Therefore i will not appropriately review my own work like i will ,if it were done by (say) you.
3. Assurance: whenever you make an opinion saying it is true or not. Eg:audit, review engagement,
Non assurance: whenever you dont express an opinion.. Eg: forensic audit, due diligence investigation (you search for fact instead of saying the fact is true)4. I believe, we dont set audit fees, we only set the basis of calculation of audit fees.. Not sure though..
Q4 is in mind of i think all of us.
Potential auditor do know about the business of the client and its business base.
Audit firm consider if they wishes to take part in tendering process
Ethical issues ( threats and safeguards )
Commercial issues ( fee / growing business / sector prospect / additional services )
Competence and resources ( to meet high quality services ISQC1)
Growing company means more opportunity for additional servicesAll these will be done through primary understanding of client business !!
Sukhdeo, the above comments are all valid – particularly if you knew Dizfaris’ father!
Do you need me to say my piece? It will not be radically different but I will if you wish
Objectivity is being free from any distracting influence or bias whereas independence involves having no relationship with the client like undue dependence on fees, close family, loans to or from, beneficial interests, no gifts or other benefits.
You could satisfy all those criteria yet still not be objective. For example, you have had this audit client for so long that you know perfectly well and in fine detail how the systems work. So there is a danger that you will see only what you normally see and you don’t approach the audit with fresh eyes – you lack objectivity
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