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    ACC214@Prac 2019

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    nyashatakura26

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    ACC214@Prac 2019

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    nyashatakura26
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    ACC214@Prac2019

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    ACC214@Prac 2019

    Uploaded by

    nyashatakura26

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    © All Rights Reserved
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    [MIDLANDS STATE UNIVERSITY

    FACULTY OF COMMERCE
    DEPARTMENT OF ACCOUNTING
    (ACC 214) INTRODUCTION TO PERFORMING THE AUDIT PROCESS
    LECTURER: GUTI O
    2019 VISITING CLASS

    PRACTICE QUESTION ONE

    Independence
    It has been suggested that the most important matter affecting the credibility of the auditor is that
    of 'independence'.
    Required
    (a) Discuss, giving examples, matters other than independence, which might be relevant in
    relation to the credibility of the auditor and steps that the accounting profession has taken or
    might take in relation to them.
    (b) Discuss the following situations in the context of the independence of the auditor, showing
    clearly the principles involved.
    (i) The audit manager in charge of the audit assignment of Aple holds 1,000 $1 ordinary shares
    in the company (total shares in issue – 100,000). The audit partner holds no shares.
    (ii) The recurring audit fee receivable from Beta, a private company, is $100,000. The total fee
    income of the audit firm is $700,000.
    (iii) The audit senior in charge of the audit of Second Bank has a personal loan from the bank of
    $2,000 on which she is currently paying 12% interest.
    (iv) The audit partner is responsible for two audit assignments, ABC and Belta. ABC has
    recently tendered for a contract with Belta for the supply of material quantities of goods over a
    number of years. Belta has asked the audit partner to advise on the matter.

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