Discuss the ethical and professional consideration

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Question - You are an audit manager of P & Q Company, a CPA firm in Hong Kong SAR. Recently a partner of your firm, Mr. Adrian Lai gave you an instruction to carry out a preliminary review on a potential client, Pacific Paints Limited ("PP"). Your firm has been approached by PP to audit their financial statements for the year ended 31 December 2019. You are aware of the following points after discussion with Miss Erica Wong, PP's Finance Director, on 27 June 2020:

1. PP is a company listed on the Hong Kong Stock Exchange which is principally engaged in the manufacturing, trading and retailing various kinds of paints.

2. Erica is a non-practising member of the HKICPA. She plans to get married with Edmond, Adrian's son in a year's time.

Required -

(a) Discuss the ethical and professional consideration with respect to perceived independence in this potential audit engagement of PP and list the safeguards needed to be taken by P & Q Company if it accepts the audit engagement.

(b) If P & Q Company considers to accept the audit engagement with PP, describe the ethical obligations that it should comply with in relation to the change of auditors.

Reference no: EM132600275

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