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Hi tutor,
I have one more question.
If an auditor has his wife who owns share to one of the his client, can he still engage in that audit performance? Or No? as the fundamental principle could be affected?Thank you,
It depends what you mean by “an auditor” – if he’s the engagement partner then NO. The threat to objectivity would be insurmountable – NO safeguards would be adequate to reduce that threat to an acceptable level.
If he was a junior member of the audit team, appropriate safeguards might be put in place depending on what % shareholding we are talking about.
Hi, thank you for your reply.
The auditor in this case is an audit junior. The scenario doesn’t specify how many % of shares are held by the audit junior’s partner. However, what we know from the given facts is the client is likely to be suffering from a serious profit loss due to the client’s main customer going into the liquidation (I am not sure if this fact matters in deciding the financial interest issue).
I have read into the standard and can see that this matter is a very ‘open’ ended matter. Can such answer be:
Audit junior can be part of the engagement team with the condition that his partner disposes any financial interest (shares in this case) so they are no longer material and the audit junior’s audit work is appropriately reviewed. And all of these requirements are clearly documented and acknowledged.
Thank you
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