Identify potential threats to independence

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Question - Consider the following independent situations.

1. The company's auditor finalises the financial statements after the (non-listed) client has substantially prepared the accounting records. The auditor proposes a number of adjustments to account for impairment of assets. The client admits to having limited knowledge of identifying and calculating impairment.

2. You are a sole practitioner with both an audit practice and an account preparation company, both of which are solely owned and operated by you. Your client provides original documents (invoices and other relevant documentation). The journal entries and general ledger records and financial statements are prepared by the account preparation company. These are then audited by the audit practice.

Required - For each of the independent situations above:

a) Identify potential threats to independence.

b) Recommend safeguards to reduce the independence threats.

Reference no: EM132997216

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