AA ch 1 to 4

You are an audit manager in Bark & Co. and have been assigned to the audit of Foliage Co. for the first time this year. Foliage Co. is a listed company which specialize in manufacturing musical instruments. You will be taking over from Kim Baum, the audit manager who has been in a charge of the audit for the last three years. Kim has just announced that he is leaving Bark & Co. to join Foliage Co. as the financial controller. Kim has recently completed the planning for the current year audit in preparation for the final audit which is due to commence next month.

Jane leaf has been the audit engagement partner Since Foliage Co. became an audit client almost 8 years ago. As she has completed seven years as the audit engagement partner, Jane has recently been rotated off the audit engagement. The new the audit engagement, Chang Petiole, has suggested that in order to maintain a close relationship with the Foliage Co, Jane leaf should undertake the roll of Engagement Quality Control Reviewer this year.

The total fees received by Bark & Co from Foliage Co in respect of aa services provided in the last year amounted to 16% of the firm's total fee income. The current year's total fee income for audit, tax and other audit-related services is expected to be greater than last year.

What is the most appropriate response to the suggestion that Jane leaf takes on the role of Engagement Quality Control Review ?

• Jane leaf could take the review role immediately

• Jane leaf could take the review role immediately but additional safeguards will be required

• Jane leaf should not serve as the Engagement Quality Control Review for a period of at least five years

• Bark & Co will need to consider resigning as auditor of Foliage Co

You are an audit manager in Bark & Co. and have been assigned to the audit of Foliage Co. for the first time this year. Foliage Co. is a listed company which specialize in manufacturing musical instruments. You will be taking over from Kim Baum, the audit manager who has been in a charge of the audit for the last three years. Kim has just announced that he is leaving Bark & Co. to join Foliage Co. as the financial controller. Kim has recently completed the planning for the current year audit in preparation for the final audit which is due to commence next month.

Jane leaf has been the audit engagement partner Since Foliage Co. became an audit client almost 8 years ago. As she has completed seven years as the audit engagement partner, Jane has recently been rotated off the audit engagement. The new the audit engagement, Chang Petiole, has suggested that in order to maintain a close relationship with the Foliage Co, Jane leaf should undertake the roll of Engagement Quality Control Reviewer this year.

The total fees received by Bark & Co from Foliage Co in respect of aa services provided in the last year amounted to 16% of the firm's total fee income. The current year's total fee income for audit, tax and other audit-related services is expected to be greater than last year.

Which of the following is the LEAST appropriate response in relation to fee income received by Bark & Co from Foliage Co ?

• Bark & Co should assess whether audit & non audit fees would represent mare than 15% of gross practice income for two consecutive years

• If the recurring fee are likely to exceed 15% of annual practice income this year Bark will need to resign as auditors of Foliage Co

• If the recurring fee are likely to exceed 15% of annual practice income this year, additional consideration should be given as to whether the taxation and audit - related should be undertaken by the firm

• If the fee do exceed 15% this should be disclosed to those charged with governance at Foliage Co

You are an audit manager in Bark & Co. and have been assigned to the audit of Foliage Co. for the first time this year. Foliage Co. is a listed company which specialize in manufacturing musical instruments. You will be taking over from Kim Baum, the audit manager who has been in a charge of the audit for the last three years. Kim has just announced that he is leaving Bark & Co. to join Foliage Co. as the financial controller. Kim has recently completed the planning for the current year audit in preparation for the final audit which is due to commence next month.

Jane leaf has been the audit engagement partner Since Foliage Co. became an audit client almost 8 years ago. As she has completed seven years as the audit engagement partner, Jane has recently been rotated off the audit engagement. The new the audit engagement, Chang Petiole, has suggested that in order to maintain a close relationship with the Foliage Co, Jane leaf should undertake the roll of Engagement Quality Control Reviewer this year.

The total fees received by Bark & Co from Foliage Co in respect of aa services provided in the last year amounted to 16% of the firm's total fee income. The current year's total fee income for audit, tax and other audit-related services is expected to be greater than last year.

What action should Kim Baum have taken when the possibility of employment with the client and what action should be taken to manage the threat ?

• Option A

• Option B

• Option C

• Option D

You are an audit manager in Bark & Co. and have been assigned to the audit of Foliage Co. for the first time this year. Foliage Co. is a listed company which specialize in manufacturing musical instruments. You will be taking over from Kim Baum, the audit manager who has been in a charge of the audit for the last three years. Kim has just announced that he is leaving Bark & Co. to join Foliage Co. as the financial controller. Kim has recently completed the planning for the current year audit in preparation for the final audit which is due to commence next month.

Jane leaf has been the audit engagement partner Since Foliage Co. became an audit client almost 8 years ago. As she has completed seven years as the audit engagement partner, Jane has recently been rotated off the audit engagement. The new the audit engagement, Chang Petiole, has suggested that in order to maintain a close relationship with the Foliage Co, Jane leaf should undertake the roll of Engagement Quality Control Reviewer this year.

The total fees received by Bark & Co from Foliage Co in respect of aa services provided in the last year amounted to 16% of the firm's total fee income. The current year's total fee income for audit, tax and other audit-related services is expected to be greater than last year.

Select whether the following statements describe a rulebook approach or a conceptual framework approach to ethics.

• 1. Rule book

  2. Conceptual

  3. Conceptual

  4. Rule book

• 1. Conceptual

  2.Rule book

  3. Conceptual

  4. Rule book

• 1. Rule book

  2. Conceptual

  3. Rule book

  4. Conceptual

• 1. Rule book

  2. Conceptual

  3. Rule book

  4. Rule book

 

You are an audit manager in Bark & Co. and have been assigned to the audit of Foliage Co. for the first time this year. Foliage Co. is a listed company which specialize in manufacturing musical instruments. You will be taking over from Kim Baum, the audit manager who has been in a charge of the audit for the last three years. Kim has just announced that he is leaving Bark & Co. to join Foliage Co. as the financial controller. Kim has recently completed the planning for the current year audit in preparation for the final audit which is due to commence next month.

Jane leaf has been the audit engagement partner Since Foliage Co. became an audit client almost 8 years ago. As she has completed seven years as the audit engagement partner, Jane has recently been rotated off the audit engagement. The new the audit engagement, Chang Petiole, has suggested that in order to maintain a close relationship with the Foliage Co, Jane leaf should undertake the roll of Engagement Quality Control Reviewer this year.

The total fees received by Bark & Co from Foliage Co in respect of aa services provided in the last year amounted to 16% of the firm's total fee income. The current year's total fee income for audit, tax and other audit-related services is expected to be greater than last year.

What action should Kim Baum have taken when the possibility of employment with foliage Co Arose?

• Kim should have notified Bark & Co of the potential employment so he could be removed from the audit team

• Kim should have declined the offer of employment

• Kim should not have applied for employment with an audit client while employed by Bark & Co

• Kim should have asked for permission from Bark & Co before applying for a job with Foliage Co

You are an audit manager in Miranda & Co and you are planning the audit of Milberry Co which manufactures luxury handbags and other fashion accessories. Milberry Co has been an audit client of your firm for four years.

From a review of the correspondence file you note that the audit engagement partner and the finance director have known each other socially for many years and in fact went on holiday together last summer with their families. as a result of this friendship the partner has not yet spoken to the client about the fee for last year's audit , 20%of which is still outstanding.

The financial controller of Milberry Co was appointed two months ago. prior to this appointment the financial controller was an audit senior at Miranda & Co and was a member of the audit team for Milberry Co.

Employees of Milberry Co are entitled to purchase handbags at a discount of 40% and during the planning meeting with the finance director he offers you and your audit team the same level of staff discount.

The finance director has asked if you firm will prepare the company's tax return and provide tax advice to minimise the amount of tax payable.

Select which threat to objectivity is created by the information obtained from the review of the correspondence file.

• 1. Familiarity

  2. self-interest

• 1. Advocacy

  2. self-interest

• 1. Familiarity

  2. self-interest

• 1. Familiarity

  2. Advocacy

You are an audit manager in Miranda & Co and you are planning the audit of Milberry Co which manufactures luxury handbags and other fashion accessories. Milberry Co has been an audit client of your firm for four years.

From a review of the correspondence file you note that the audit engagement partner and the finance director have known each other socially for many years and in fact went on holiday together last summer with their families. as a result of this friendship the partner has not yet spoken to the client about the fee for last year's audit , 20%of which is still outstanding.

The financial controller of Milberry Co was appointed two months ago. prior to this appointment the financial controller was an audit senior at Miranda & Co and was a member of the audit team for Milberry Co.

Employees of Milberry Co are entitled to purchase handbags at a discount of 40% and during the planning meeting with the finance director he offers you and your audit team the same level of staff discount.

The finance director has asked if you firm will prepare the company's tax return and provide tax advice to minimise the amount of tax payable.

Which is the MOST appropriate response to the outstanding fees from Milberry Co?

• The auditor should resign from the client

• The auditor should report the client to the ACCA

• The auditor can continue working for the client but should ensure that the audit firm's credit control department are informed of the outstanding fees

• The auditor's report for year should not be issued until the fees have been paid

You are an audit manager in Miranda & Co and you are planning the audit of Milberry Co which manufactures luxury handbags and other fashion accessories. Milberry Co has been an audit client of your firm for four years.

From a review of the correspondence file you note that the audit engagement partner and the finance director have known each other socially for many years and in fact went on holiday together last summer with their families. as a result of this friendship the partner has not yet spoken to the client about the fee for last year's audit , 20%of which is still outstanding.

The financial controller of Milberry Co was appointed two months ago. prior to this appointment the financial controller was an audit senior at Miranda & Co and was a member of the audit team for Milberry Co.

Employees of Milberry Co are entitled to purchase handbags at a discount of 40% and during the planning meeting with the finance director he offers you and your audit team the same level of staff discount.

The finance director has asked if you firm will prepare the company's tax return and provide tax advice to minimise the amount of tax payable.

Which of the following statements in respect of the relationship between the new financial controller and the audit firm are TRUE ?

• The audit approach should be revised to ensure procedures and items to be tested are not predictable

• The audit team should comprise people who know the audit senior as this will make the audit run more smoothly and increase efficiency

• The firm must resign as auditor as the threat to objectivity is too significant to safeguard

• The audit senior should not be allowed to be the financial controller and should resign

You are an audit manager in Miranda & Co and you are planning the audit of Milberry Co which manufactures luxury handbags and other fashion accessories. Milberry Co has been an audit client of your firm for four years.

From a review of the correspondence file you note that the audit engagement partner and the finance director have known each other socially for many years and in fact went on holiday together last summer with their families. as a result of this friendship the partner has not yet spoken to the client about the fee for last year's audit , 20%of which is still outstanding.

The financial controller of Milberry Co was appointed two months ago. prior to this appointment the financial controller was an audit senior at Miranda & Co and was a member of the audit team for Milberry Co.

Employees of Milberry Co are entitled to purchase handbags at a discount of 40% and during the planning meeting with the finance director he offers you and your audit team the same level of staff discount.

The finance director has asked if you firm will prepare the company's tax return and provide tax advice to minimise the amount of tax payable.

Which is the MOST appropriate response with respect to the discount offered by Milberry Co to the audit team?

• The discount may be accepted as it is the same as that offered to the client's employees

• The discount should be rejected as it is unlikely to be a trivial monetary amount

• The discount should be rejected as gifts or hospitality are not acceptable per the ACCA code of Ethics

• Audit manager approval must be obtained before the discount is accepted

You are an audit manager in Miranda & Co and you are planning the audit of Milberry Co which manufactures luxury handbags and other fashion accessories. Milberry Co has been an audit client of your firm for four years.

From a review of the correspondence file you note that the audit engagement partner and the finance director have known each other socially for many years and in fact went on holiday together last summer with their families. as a result of this friendship the partner has not yet spoken to the client about the fee for last year's audit , 20%of which is still outstanding.

The financial controller of Milberry Co was appointed two months ago. prior to this appointment the financial controller was an audit senior at Miranda & Co and was a member of the audit team for Milberry Co.

Employees of Milberry Co are entitled to purchase handbags at a discount of 40% and during the planning meeting with the finance director he offers you and your audit team the same level of staff discount.

The finance director has asked if you firm will prepare the company's tax return and provide tax advice to minimise the amount of tax payable.

Select the option which correctly identifies whether or not a self-review threat is likely to arise in relation to tax services requested.

• Option A

• Option B

• Option C

• Option D