Determine any actions that your firm should take

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Reference no: EM133100301

Question - Your firm has been the external auditor of Comel Sdn Bhd (Comel) for ten years and Ahmad has been the audit engagement partner for all that time. For the year ending 31 December 2021, Ahmad expects your firm to earn the following fees from Comel:

Engagement

RM'000

External audit

1,200

Annual review of interim financial information

750

One-off engagement to provide accounting services

200

 

2,150

Your firm's total annual fee income from all its clients is expected to be RM16.2 million for the year ending 31 December 2021.

The one-off engagement to provide accounting services relates to the preparation of the financial statements for the year ending 31 December 2021. Comel's finance director requested the service because Comel's financial controller has been on sick leave and is not expected to return to work before the year end. Comel's finance director told Ahmad that if your firm does not provide the service then Comel will put the 2022 audit out to tender.

Required -

1. Identify and explain the threats to independence and objectivity arising from the scenario.

2. Determine any actions that your firm should take to mitigate these threats.

Reference no: EM133100301

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