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plant co is a large private company with a financial year to 30 june and has been an audit client of horti and co for several areas. Alan marshlow, a partner of horti and co has acted as the engagement quality review on the last two audits to the year ended 31 december 20X4. At a recent meeting, he advised that he can no longer be Eqr on the engagement as he is considering accepting appointment as a non executive director and will sit on the audit committee of plant co.
Why would this not lead to a familiarity threat
plant co is a large private company with a financial year to 30 june and has been an audit client of horti and co for several areas. Alan marshlow, a partner of horti and co has acted as the engagement quality review on the last two audits to the year ended 31 december 20X4. At a recent meeting, he advised that he can no longer be Eqr on the engagement as he is considering accepting appointment as a non executive director and will sit on the audit committee of plant co.
Why would this not lead to a familiarity threat
Please see this explanation:
https://opentuition.com/topic/march-june-2019-question-number-3how does self interest and self review threat arise in this situation
If the partner is no longer engagement quality reviewer, then he would not be reviewing the audit so the self review threat does not arise.
Also a safeguard would be to rotate the partner so that he does not review the work related to this audit rather than having to resign. Is this correct
Self-review would still arise at the “firm level” – Horti & Co is audit firm and Alan is a partner with responsibilities for financial statements of Plant Co
There are no safeguards to reduce risk to an acceptable level https://opentuition.com/topic/ethical-issues-horti-co
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