Reference no: EM133032185

ACCT 6006 Professional Auditing 

Instructions: You are required to provide comments regarding the following two short answer questions.

1) You have recently started a graduate placement at the MPA Partnership, a large Accounting and Auditing firm with head office located in Robina, Gold Coast. Your manager has asked you to be involved with a client Altec to provide some advices regarding a takeover deal undertaken by Altec which is planning to takeover a data mining company Cloud AI.

The client consults you to provide an audit report of Cloud AI's financial report and expects all instances of frauds contained in the financial reports to be identified through the Audit.

Requirement:

Comment and Evaluate the client expectation in the case study.

2) MPA Partnership is tendering for the audit of Instyle Ltd for the 2021 financial year. As part of the audit team at MPA Partnership, you note that the engagement partner Phillip Andrew holds an interest in Instyle Ltd and the interest is material during your review of Instyle' business extract. Further the investigation, you have observed that Philip is the director of a solar business which is the major supplier of Instyle Ltd.

Required

1) Identify and evaluate the threat to assurance engagement.

2) Explain any relevant or practical safeguard that could be put in place to reduce the threat.

3) If the interests were held by another general partner in the office, rather than being held directly by the engagement partner Philip, would it make any difference to your answers.

Referencing:
- You need to find at least 5 references to support your arguments or evaluation.
- Harvard Referencing Style is

Article 1 - Auditing Standard ASA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of a Financial Report

Article 2 - APES 110 Code of Ethics for Professional Accountants (including Independence Standards)

a) ASQC - Quality control

b) APES 110 Code of Ethics for Professional Accountants

There are 2 issues that threated independence in the above scenario.

Identify issue 1: The potential engagement partner, Phillips Andrew hold a material pr significant financial interest (assuiming) in the potential audit client

Identify the relevant section of the professional code applicable to this issueapesll Part 4A SECTION 510 Financial interest

What threats are identified & section number APES110 SectionSl2 - self interest threat

What are the 3 factors are to be considered in evaluating the threat?

Is financial interest direct or indirect

Materiality

What are the safeguards for this threat?