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Hurling Co.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Hurling Co.

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Kim Smith.
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  • July 24, 2021 at 5:24 pm #629330
    sahersk
    Participant
    • Topics: 32
    • Replies: 22
    • ☆☆

    Hurling Co’s finance director has informed the audit engagement partner that one of the
    company’s non?executive directors (NEDs) has just resigned, and he has enquired if the
    partners at Caving & Co can help Hurling Co in recruiting a new NED.
    Specifically he has requested the engagement quality control reviewer, who was until last
    year the audit engagement partner on Hurling Co, assist the company in this recruitment.

    Could you explain how this would be a Self Interest Threat and not a Familiarity Threat.

    July 24, 2021 at 6:47 pm #629335
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6789
    • ☆☆☆☆☆

    As the published answer says:
    “This represents a self-interest threat as the audit firm cannot undertake the recruitment of members of the board of Hurling Co, especially a NED who will have a key role in
    overseeing the audit process and audit firm.”

    Self-interest arises because the NEDs role is one of oversight – and NEDs (e.g. on an audit committee) will make recommendations to the board on the effectiveness of the audit firm and the services they provide, etc. Familiarity can’t have arisen (yet) because the audit firm may not know the NED in any capacity.

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