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Dear tutor,
Thank you for your help and explanation. What I understand from your reply is that the answer to the question should be option B “The audit engagement partner cannot provide assistance and another partner must provide assistance” as the service can be rendered by another partner, provided that safeguard is on place.
But why the answer is option 1 “No threat arises and no safeguards are required”? I am really confused.
This is the original question (I have paraphrased it when creating this post):
“It is 1 July 20X5. You are an audit manager in NANCO & Partner, a large audit firm which specialises in the audit of retailers.
Cookies Co
Cookies Co’s management has decided to establish an audit committee. The company does not have any independent non?executive directors with recent and relevant financial experience and have requested our firm’s assistance with this. Management has requested that the audit engagement partner assists by reviewing qualifications and advising on technical, financial competence of applicants.
Which of the following statements is TRUE in respect of the request for assistance with
recruitment of independent non?executive directors for Cookies Co?– No threat arises and no safeguards are required
– The audit engagement partner cannot provide assistance and another partner must provide assistance
– The audit firm cannot provide assistance and the request must be declined
– The audit engagement partner can provide the assistance but an engagement quality review must be performed”P/S: thank you for your warm welcome. I am happy to be here and learn from your valuable knowledge.
Dear tutor,
Thank you for your reply. I totally agree with your point. Actually I thought the same way like you did: recruiting a NED working in the audit committee obviously creates self-interest threat because of their special roles & responsibilities.
However, the answer to the question is option 1: “No threat arises and no safeguards are required” and this is the explanation which made me confused:
“The ACCA Code of Ethics and Conduct states that reviewing qualifications and assessing
competence of applicants does not generally create a threat to objectivity as the auditor is
not making any management decisions that could cause a threat to objectivity. Pro Co can
provide this service if it will not result in the firm assuming management responsibilities. ”Can you please help?
Please feel free to let me know if you do not understand my point/question.
Thank you in advance!Dear tutor.
Thank you for your reply. I think your reply was spot on – yes that helps answer my question.
Much appreciated!
Ah I see. So it means that, if the goods were bought in UK, the net effect on the VAT position of the trader would be “£2,000 to reclaim from HM Revenue and Customs”. But here as the goods is imported abroad, the reverse charge is applied; therefore, the net effect on the position is Nil as long as the goods is in the hand of the trader.
Ah, I see what you mean: If it’s mentioned of “chargeable gains”, it means gains of all sold assets. But here it’s only a chargeable gain of one asset.
I see.
So, it means for question 3 “Why calculating business mileage is: 10,000 miles at 45p/mile and 1,000 miles at 25p/mile, without considering the private use of 40%?”, if they use the total miles instead of business miles, we have to consider the business use (60%) in calculating the car expenses (capital – and running expenses) using the flat rate method?
Item 1 and 2 are clear to me. Thanks!
Oh I see. So, it depends on the usability of the building.
Thank you for your advice!Oh I see. I just thought that this exemption is related to the relationship within family.
Now it’s clear. Thank you very much!I am confused why the first question, they used marriage exemption of £5,000, but they did not apply this exemption in the second question. How can it be?
Question 1. Felipe made the following lifetime transfers:
(b) £15,000 to his son on 6 July 2023 as a wedding present.
Calculate the chargeable amount for each of Felipe’s lifetime gifts.Question 2. Amir died on 1 February 2024. During his lifetime, he made two gifts:
2.1. On 30 November 2016 he gave £200,000 to his son
2.2. On 15 June 2017 he gave £350,000 to his daughter
Select the correct chargeable amount of the above gifts (i.e. value before the deduction of the nil rate band) which becomes chargeable as a result of Amir’s death.Thank you.
I understand that there is no personal private use adjustment for companies.
But you wrote “staff costs are allowable expenses for the employer”. Normally, I can understand that staff costs are anything that incurs at work, on business trip and so on, such as office consumables, employee consumables, travel and subsistence etc.
But I do not think staff costs include their private costs such as his private Apple subscription or Netflix subscription, does it?
How can I understand correctly of your definiton of staff costs?Thank you for your reply.
From what you wrote, I can understand that in both cases, private expenses are never allowable, only business-related expenses are.
But why in the text book, it’s said “There are no private use restrictions for companies: any private expenses of a director or employee of a company are fully allowable, when calculating the tax adjusted trading profit.”
How can I understand it correctly? Or is it not correct?