ExpertThis question is part of a case study — click to read the full scenario(Case 01)
SECTION A - CASE 1: AQUAPURIFY NGO
AquaPurify NGO is a global charity providing clean water infrastructure in developing nations. You are the audit manager at Grant & Co. The audit for the year ended 31 March 20X6 is being planned. The audit engagement partner, Sarah Jenkins, has been on the engagement for seven years. AquaPurify recently received a massive government grant that requires a separate assurance report. The charity's finance director, a former Grant & Co audit manager who left the firm 18 months ago, has offered the audit team a complimentary luxury safari trip 'as a thank you for their hard work'. Furthermore, Grant & Co has been asked to provide internal audit services to AquaPurify.
Which of the following correctly identifies the ethical threat created by Sarah Jenkins serving as the engagement partner for seven years, and the appropriate safeguard?
ACCA · Question 03 · Audit Framework and Regulation
SECTION A - CASE 1: AQUAPURIFY NGO
AquaPurify NGO is a global charity providing clean water infrastructure in developing nations. You are the audit manager at Grant & Co. The audit for the year ended 31 March 20X6 is being planned. The audit engagement partner, Sarah Jenkins, has been on the engagement for seven years. AquaPurify recently received a massive government grant that requires a separate assurance report. The charity's finance director, a former Grant & Co audit manager who left the firm 18 months ago, has offered the audit team a complimentary luxury safari trip 'as a thank you for their hard work'. Furthermore, Grant & Co has been asked to provide internal audit services to AquaPurify.
Which of the following statements is true regarding the provision of internal audit services to AquaPurify by Grant & Co?
SECTION A - CASE 1: AQUAPURIFY NGO
AquaPurify NGO is a global charity providing clean water infrastructure in developing nations. You are the audit manager at Grant & Co. The audit for the year ended 31 March 20X6 is being planned. The audit engagement partner, Sarah Jenkins, has been on the engagement for seven years. AquaPurify recently received a massive government grant that requires a separate assurance report. The charity's finance director, a former Grant & Co audit manager who left the firm 18 months ago, has offered the audit team a complimentary luxury safari trip 'as a thank you for their hard work'. Furthermore, Grant & Co has been asked to provide internal audit services to AquaPurify.
Which of the following statements is true regarding the provision of internal audit services to AquaPurify by Grant & Co?
Answer options:
It creates an intimidation threat and must be declined immediately.
It creates a self-review threat; the firm should only accept if separate teams are used and management takes responsibility for internal audit decisions.
It creates a familiarity threat, but can be accepted without safeguards as AquaPurify is a charity.
It is strictly prohibited under all circumstances for any audit client.
How to approach this question
Full Answer
Common mistakes
Practice the full ACCA AA — Audit and Assurance Practice Exam 2
18 questions · hints · full answers · grading