KCHAP 14.15

George Cameron, the chief executive of Blue Ltd, has proposed that a fee only be payable to Yellow LLP if the loan application is successful.

Which two of the following threats are most likely to be present here, in line with the IESBA Code?

• A Familiarity threat

• B Self-interest threat

• C Intimidation threat

• D Advocacy threat

Which one of the following should be March LLP's course of action?

• A Accept the offer as it is part of auditor-client relations

• B Request that the offer be directed to all the staff of the assurance firm and not just the audit team

• C Accept the offer but emphasise to the management of Flyby plc that this will not prejudice any future audits

• D Reject the offer as it is not of insignificant value

Which one of the following should be Jude LLP's course of action?

• A Continue to act with safeguards

• B Threaten to issue a qualified auditor's opinion if Merry Ltd do not pay

• C Consider whether it is necessary to resign

• D Accept shares in Merry Ltd to the value of the audit fee

Which one of the following should be Estelle LLP's course of action?

• A The partner should dispose immediately of the shares

• B The partner does not need to dispose of the shares but can transfer them to his wife

• C The partner can transfer the shares into the name of the audit firm

• D The partner may keep the shares but must have no involvement in the audit of that particular client

Assuming that he wishes to accept the offer if at all possible, which one of the following should be James Smith's course of action?

• A Accept the offer provided Jones LLP are willing to resign

• B Reject the offer

• C Accept the offer on the condition that he is placed in a different country

• D Accept the offer with the condition that an amount is paid to Jones LLP by way of compensation

Which one of the following should be Harry's course of action?

• A Accept the offer

• B Reject the offer

• C Accept the offer after two years have elapsed from the conclusion of the audit

• D Accept the offer with the condition that this transaction is disclosed in the auditor's report

Which one of the following measures should Duncan LLP take with regards to the audits of Lilac plc and Soda Ltd?

• A Implement safeguards in respect of Lilac plc and resign from Soda Ltd

• B Implement safeguards in respect of both Lilac plc and Soda Ltd

• C Resign from Lilac plc and implement safeguards in respect of Soda Ltd

• D Resign from both Lilac plc and Soda Ltd

Which one of the following measures should Patricia LLP take with regards to the audits of Karen plc and Linda Ltd?

• A Implement safeguards in respect of Karen plc and resign from Linda Ltd

• B Implement safeguards in respect of both Karen plc and Linda Ltd

• C Implement safeguards in respect of Karen plc and take no action with respect to Linda Ltd

• D Take no action with respect to either company

A client has offered the auditor an audit fee based on a percentage of reported profits.

• A Accept with no safeguards

• B Accept with safeguards

• C Reject

An audit client has requested that the audit partner serve on the board of directors.

• D Accept with no safeguards

• E Accept with safeguards

• F Reject