” Henry Wong is the audit partner of Wong, Judd & Co. James Swann, the MD of Evatt Ltd, a large public listed publishing company
andHenryWong are
long time friends. Currently they are involved ina substantial joint business venture. James
disclosed to Henry that Evatt Ltd
is preparing tender documents for next years audit. He further indicated that
the lowest tender bid received will secure the audit engagement. In addition to
the usual audit services, Evatt Ltd
is also requiring consulting services for designing and implementing a new
financial information technology system that will generate information for the
companys financial statements.

Henry wants to tender for the audit of Evatt Ltd., so
he met with his staff todiscuss the potential threats to independence in relation to Evatt
& Co as audit client. During the meeting, Alvin Turei, the audit senior
commented that his aunty is the financial controller of the company.

Required:
Referring to PES1 (Revised) andPES3
(Revised), and citing the standards where appropriate:
a)
Explain the ethical audit
issues identified in the case facts above
b)
Explain the specific threats to
independence that Henry and his firm are exposed to in relation to Evatt &
Co, and
c)
Suggest safeguards that may
reduce the audit teams exposure to independence identified in (a) and (b)
Ensure that your answers are clear and specific.

Present your answer as follows:

(a)
Ethical audit
issue

(b)
Specific
threats

(c)
Safeguards

(4 points = 2 marks) (any 4
points = 2 marks) (any 12 points = 6 marks)

a)
Ethical audit issue must contain integrity, auditing duties and
responsibility
b)
Ethical issue must contain objectivity, confidentiality, competence
c)
Ethical issue must contain pes1 100.5 (a), (b), (c), (d)
d)
Safeguard must contain pes2 100.13, 14,16

Word 600

Pes1 and 2 is in.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Professional_Ethical_Standards.aspx””>http://xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Professional_Ethical_Standards.aspx

Must relate to New Zealand auditing standard
not the USAHenry Wong is the audit partner of Wong, Judd &
Co. James Swann, the MD of Evatt Ltd, a large public listed publishing company
andHenryWong are
long time friends. Currently they are involved ina substantial joint business venture. James
disclosed to Henry that Evatt Ltd
is preparing tender documents for next years audit. He further indicated that
the lowest tender bid received will secure the audit engagement. In addition to
the usual audit services, Evatt Ltd
is also requiring consulting services for designing and implementing a new
financial information technology system that will generate information for the
companys financial statements. Henry wants to tender for the audit of Evatt Ltd., so
he met with his staff todiscuss the potential threats to independence in relation to Evatt
& Co as audit client. During the meeting, Alvin Turei, the audit senior
commented that his aunty is the financial controller of the company. Required: Referring to PES1 (Revised) andPES3
(Revised), and citing the standards where appropriate:a)
Explain the ethical audit
issues identified in the case facts aboveb)
Explain the specific threats to
independence that Henry and his firm are exposed to in relation to Evatt &
Co, andc)
Suggest safeguards that may
reduce the audit teams exposure to independence identified in (a) and (b)Ensure that your answers are clear and specific.
Present your answer as follows: (a)
Ethical audit
issue(b)
Specific
threats(c)
Safeguards(4 points = 2 marks) (any 4
points = 2 marks) (any 12 points = 6 marks)a)
Ethical audit issue must contain integrity, auditing duties and
responsibilityb)
Ethical issue must contain objectivity, confidentiality, competencec)
Ethical issue must contain pes1 100.5 (a), (b), (c), (d) d)
Safeguard must contain pes2 100.13, 14,16Word 600
Pes1 and 2 is in.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Professional_Ethical_Standards.aspx””>http://xrb.govt.nz/Site/Auditing_Assurance_Standards/Current_Standards/Professional_Ethical_Standards.aspxMust relate to New Zealand auditing standard
not the USA”