Reference no: EM132951273

Problem 1: Discuss the following situations in the context of the independence of the auditor, showing clearly the principles involved, and whether the case would result in any breach of the professional code of ethics.

i. The audit manager in charge of the audit assignment of Andrew Co holds 1,000 $1 ordinary shares in the company (total shares in issue - 100,000). The audit partner holds no shares.

ii. The recurring audit fee receivable from Janet Co, a private company is $100,000. The total fee income of the audit firm is $700,000.

iii. The audit senior in charge of the audit of Margot Bank Co has a personal loan from the bank of $2,000 on which she is currently paying 12% interest.

iv. The audit partner is responsible for two audit assignments, Harry Co and Jean Co. Harry Co has recently tendered for a contract with Jean Co for the supply of material quantities of goods over a number of years. Jean Co has asked the audit partner to advise on the matter.