- This topic has 1 reply, 2 voices, and was last updated 8 years ago by
.
- Posts
I am still not cleared with the doubt
your answer says Some additional information passed to then without them having requested that information could potentially be seen to have influenced the auditors’ opinion
of course the information was given without being requested.but what link does these business development information has with financial statements that the auditors audit and therefore how can they influence auditor’s opinion.
could you please explain your point with an example ?
And the ans kit says “Russell Bell moving from Wire Co to Bunk & Co to take up the position of audit partner creates potential threats to objectivity. The IESBA Code states that self-interest, self-review or familiarity threats may be created if a member of the audit team has recently served as a director, officer, or employee of the audit client. Though the threats may be mitigated somewhat by him not being a formal member of the audit team of Wire Co, the fact that Russell helped the audit team (by providing information about the audited entity) means that the threats described above apply in this situation. There is a perception that the audit team is not independent.”
How does all these threats comes into existence ie self interest self review and familarity becoz f the disclosed info.i can understand that for self review but for other threats i cnt understand the reasoning
The threats are all relevant – even though Russell has correctly been excluded from direct involvement with the audit
He has passed on knowledge about the client and, presumably, about his own activities within that client
The audit team has therefore been given information that will undoubtedly influence their perceptions about the Wire Co activities
The information could possibly lead them away from the areas that they had personally previously considered to be of potential interest and diverted them towards other areas that they would have merely reviewed
The opinion that the reporting auditor reaches has to be seen to be based not on work designed by the auditor but instead on work the direction of which has been influenced by Russell
One of the issues is similar to the concepts of internal auditors being appointed to that position from within the (probably finance department) company itself
Much of the work carried out by internal auditors involves finance and to appoint someone that previously worked in that department is establishing the situation of self-review … as well as creating the opportunity of settling old scores with people that were formally close colleagues of the newly appointed internal auditor
Russell and Bunk are in a similar (not exactly the same) situation
Can you imagine the audit partner in charge of the Wire audit NOT talking with Russell about the goings-on within Wire?
This is certainly not an ideal situation 🙁
Does that make more sense to you now?
- The topic ‘qs 10 bunk bpp revision kit’ is closed to new replies.