Accounting & Finance - Auditing Question 6:Your audit firm has an advertising policy that any audit process will not take more than 20 days for any client. You start reviewing the audit files of your client ALB plc which you audit for eight years and you find the following notes.The audit team included a manager who owns 1% of the ALB’s shares. The executive partner believes that the 1% is too small and it will not affect the manager experience.Your firm offered this client a bookkeeping service for this year.One of the audit team received a high salary offer to be appointed in the client’s internal audit department as a head of department.The finance director was recently working as an auditor in your audit firm.ALB plc intends to increase its capital by issuing more shares in the stock market and the financial manager is asking your firm to manage this process. Required: Identify and explain FIVE ethical threats which arise from the above actions and for each ethical threat explain the steps which your audit firm should adopt to reduce the threats arising. Note: Prepare your answer using three columns headed The Issue, Ethical threats and Auditor’s response respectively

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Answered: Accounting & Finance - Auditing…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter7: Fixed Assets, Natural Resources, And Intangible Assets

Section: Chapter Questions

Problem 7.6C

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Accounting & Finance - Auditing

Question 6:

Your audit firm has an advertising policy that any audit process will not take more than 20 days for any client. You start reviewing the audit files of your client ALB plc which you audit for eight years and you find the following notes.
- The audit team included a manager who owns 1% of the ALB’s shares. The executive partner believes that the 1% is too small and it will not affect the manager experience.
- Your firm offered this client a bookkeeping service for this year.
- One of the audit team received a high salary offer to be appointed in the client’s internal audit department as a head of department.
- The finance director was recently working as an auditor in your audit firm.
- ALB plc intends to increase its capital by issuing more shares in the stock market and the financial manager is asking your firm to manage this process.

Required:

Identify and explain FIVE ethical threats which arise from the above actions and for each ethical threat explain the steps which your audit firm should adopt to reduce the threats arising. Note: Prepare your answer using three columns headed The Issue, Ethical threats and Auditor’s response respectively

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