ACCA · Question 04 · 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:
Evaluate the composition of AquaPure's audit committee against corporate governance best practices. Which of the following statements is correct?
Answer options:
The composition is appropriate as there is a mix of executive and non-executive directors.
The composition is deficient because an audit committee should consist entirely of independent non-executive directors.
The composition is deficient because there must be at least five independent non-executive directors.
The composition is appropriate because the executive directors have the necessary financial expertise.
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