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Hello Kim,
Russell Bell continued to hold shares in Wire for 6 months after he joined the firm as a audit partner, this creates self-interest threat to objectivity.
Is it because Russell provided advice to the audit team about Bunk, and try to influence the audit opinion being formed by the audit team in order to maximize his financial interest until he disposed the shares?
Or, regardless of whether Russell provided advice to the audit team or not, no one should hold shares in the audit client. Self-interest threat is created when a staff member regardless of whether the member is in the audit team holds shares in the audit client, as that staff member could be tempted to influence on the audit opinion.
Please correct me if I am wrong. Thank you.
Regards,
MarthewAn audit partner in the firm holds a direct financial interest in an audit client. The following is taken from ACCA’s Rulebook (which you can download from https://www.accaglobal.com/us/en/member/standards/rules-and-standards/rulebook.html)
“290.108 If other partners in the office in which the engagement partner practises in connection with the audit engagement, or their immediate family members, hold a direct financial interest or a material indirect financial interest in that audit client, the self-interest
threat created would be so significant that no safeguards could reduce the threat to an
acceptable level. Therefore, neither such partners nor their immediate family members
shall hold any such financial interests in such an audit client.”
Remember what independence means – independence of mind and independence in appearance.
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