ACCA · Question 02 · Audit and Assurance
CASE 1: AQUAPURE UTILITIES CO
AquaPure Utilities Co is a listed water treatment company. Your firm, Stream & Co, has been the auditor for 6 years. The audit engagement partner, Sarah Jenkins, has been in place for the entire 6 years. AquaPure has requested Stream & Co to provide internal audit services regarding their new environmental compliance system. The Finance Director of AquaPure recently offered the audit team a weekend stay at a luxury spa resort owned by the company. AquaPure's audit committee consists of three executive directors and two independent non-executive directors.
QUESTION:
How should Stream & Co respond to the request to provide internal audit services regarding the environmental compliance system?
Answer options:
Accept the engagement, provided separate teams are used for the external and internal audits.
Decline the engagement because external auditors are legally prohibited from providing any non-audit services to their clients.
Accept the engagement, as environmental compliance does not impact the financial statements.
Decline the engagement if the firm would be assuming a management responsibility or if the system significantly impacts financial reporting.
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