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Explain the threats to independence arising

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Reference no: EM132621500

Your firm has been the external auditor of Conti Ltd (Conti), a large private company, for ten years and Amos Boba has been the audit engagement partner for all that time. For the year ending 31 December 2019, Amos expects your firm to earn the following fees from Conti:

Engagement                                                         £'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 £16.2 million for the year ending 31 December 2019.

  • The one-off engagement to provide accounting services relates to the preparation of the financial statements for the year ending 31 December 2019. Conti's finance director requested the service because Conti's financial controller has been on sick leave and is not expected to return to work before the year-end. Conti's finance director told Amos Boba that if your firm does not provide the service then Conti would put the 2020 audit out to tender.

Required:

Problem a) Identify and explain the threats to independence and objectivity arising from the scenario. State any actions that your firm should take to mitigate these threats.

Reference no: EM132621500

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