MOQ 12 Sept 2016 — OpenTuition Forums

GGabbi9y ago

Dear Ken, I don t completely understand the answer provided for the question MOQ 12 Sept 2016 The scenario says: The previous audit manager, who is close friend to the new audit manager, left the firm before the completion of the previous year audit and now is the director of Fir Co. Which of the following identifies the threat which could arise as result of financial director previous employment at Sycamore Co and recommend an appropriate safeguard. B familiarity threat: a new audit manager should be appointed D familiarity threat: a firm should resign from the engagement. (A&C were about Self Review therefore no relevant here) The correct answer is B with explanation that as familiarity is not severe the firm should not resign but only a new audit manager should be appointed. My understanding is that with option B resolves the familiarity relationship between the auditor manager and director, however this does not eliminate the threat arise when the audit Partner join the client. Shouldn t the direct resign and join and be reappointed only after 2 years? Please, help me to clarify above doubt. Thanks and Regards Gabbi

kengarrettTutor9y ago#1

I'm not sure what you're getting at .The audit partner hasn't joined the client in this scenario. Even if he or she had, I'm not sure how you would insist that they resign as a director.

GGabbi9y ago#2

Dear Ken, Well, I might be a bit confused. The questions says: "The previous audit manager, who is close friend to the new audit manager, left the firm before the completion of the previous year audit and now is the director of Fir Co" So, what the different between the audit Partner and Audit Manger. It is not clear to me so why I though the the audit partner has joined the client (Fir Co) as director Thanks Gabriella

kengarrettTutor9y ago#3

The audit partner is the person ultimately responsible for forming an opinion on the FS and for determining that an appropriate audit report is signed. The audit manager has less responsibility. The audit manager manages the audit, but the partner signs the audit report.

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