UGB 225 and 238- writer can use any
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. (10marks)
(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 Andrew Co holds 1,000 £1 ordinary
shares in the company (total shares in issue – 100,000). The audit partner holds no shares.
(5marks)
(ii) The audit fee receivable from Janet Co, a private company is £100,000. The total fee
income of the audit firm is £700,000. (5marks)
(iii) The audit senior in charge of the audit of Margot Bank Co has a personal loan from the
bank of £2,000 on which she is currently paying 13% interest. (5marks)
(iv) The audit partner is responsible for two audit assignments, Harry Co and Jean Co.
Harry Co has recently tendered for a contract with Jean Co for the supply of material
quantities of goods over a number of years. Jean Co has asked the audit partner to advise on
the matter. (5Marks)
(c) Explain the concept of objectivity, with reference to
(i) External auditors
(ii) Internal auditors, who are members of ACCA, outlining any general
threats to objectivity that exist (8
