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Apart from the self-review threat to independence created as a result of the tax computation by audit assistant, can I also bring in the below points regarding quality control issues:
1. Audit assistant is recently qualified, and could be lacking expenience in calculating tax expense which will require making estimate to be used in the calculation of deferred tax asset/deferred tax liability. This could create threat to competence and due care.
2. It appears that the audit has not been properly directed, as audit assistant should not calculate tax for the client in the first place due to the client being a listed company.
As such, the firm should provide more training to the staffs (such as both supervisor and the audit assistant) to ensure that they are aware of requirements in relation to listed company.
1) If this recently qualified audit assistant studied Advanced Tax (P6) do you really consider that they would not have experience in preparing a corporation tax computation? Even someone who is not yet qualified but working in audit firm could have had a lot of exposure to preparing tax computations. I don’t think there is any suggestion that he is not up to the task – and even if he could make errors (no one is infallible) his work could be reviewed by a tax manager. So I would say your point is not valid. Also the tax computation (based on tax rules for determining the current tax liability) is completely separate from calculation of deferred tax for the financial statements (based on IFRS).
2) The question does not say that the audit assistant has completed the tax computation – only that he has been asked to. And the answer makes the point that he cannot because the client is listed. So I don’t think this point is valid either.