You are a Senior Manager in Federer & Co, a firm of Chartered Certified Accountants offering audit and assurance services mainly to large, privately owned companies. The firm has suffered from increased competition, due to two new firms of accountants setting up in the same town. Several audit clients have moved to the new firms, leading to loss of revenue, and an over staffed audit department. Ann Agassi, one of the partners of Federer & Co, has asked you to consider how the firm could react to this situation. Several possibilities have been raised for your consideration: 1. Several audit clients are experiencing staff shortages, and it has been suggested that temporary staff assignments could be offered. It is envisaged that a number of audit managers could be seconded to clients for periods not exceeding six months, after which time they would return to Federer & Co. Required: Identify and explain the fundamental ethical principle and ethical threat involved for Federer and co. and suggest what safeguards/actions Federer & Co can take to reduce the risk to an acceptable level.
You are a Senior Manager in Federer & Co, a firm of Chartered Certified Accountants offering
1. Several audit clients are experiencing staff shortages, and it has been suggested that temporary staff assignments could be offered. It is envisaged that a number of audit managers could be seconded to clients for periods not exceeding six months, after which time they would return
to Federer & Co.
Required:
Identify and explain the fundamental ethical principle and ethical threat involved for Federer and co. and suggest what safeguards/actions Federer & Co can take to reduce the risk to an acceptable level.
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