Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Your audit firm, Oliver Twist& Co has just taken on a new client Abuakwa Ltd Abuakwa a ver...

Your audit firm, Oliver Twist& Co has just taken on a new client Abuakwa Ltd Abuakwa a very successful health club that provides gym and fitness services The Company operates a chain of fitness

Your audit firm, Oliver Twist& Co. has just taken on a new client, Abuakwa Ltd(Abuakwa), a very successful health club that provides gym and fitness services. The Companyoperates a chain of fitness centers with wide range of workout equipment, solarium rooms, fitnesssessions, nutritional planning, changing rooms, and locker facilities.You have just been informed that your firm has received an invitation to tender for the audit of thecompany that owns Gyms Ltd., a major competitor of Abuakwa. The Managing Director ofAbuakwa, Virgil, is an old college friend of your audit manager and it was through her connectionthat your firm was able to tender for its audit. You have been assigned as senior auditor forAbuakwa.On a recent visit to your office, Virgil stated that she would like to extend an offer that all staff ofOliver Twist & Co. would be eligible for a special membership rate, which is 50% of standardmembership rates and that entitles the member to 75% off special classes. She proposed that yousit on the board of directors at Abuakwa as a non-executive director.Additionally, she proposed that your firm confirm, as part of the audit, the figures on an insuranceclaim to be submitted in respect of damage caused by a burst water pipe. The pipe burst during aspell of cold weather in the main gym area prior to the year end.Required:In the context of the above scenario:Evaluate FIVE (5) ethical threats (real or perceived) whichmay affect the independenceof your firms audit of Abuakwa;(15 marks)b. An Auditor should obtain sufficient appropriate audit evidence to be able to draw reasonableconclusion on which to base the audit opinion. In gathering such evidence, Auditor should exerciseProfessional Skepticism, defined in ISA 200.Required:i.What is professional Skepticism?2 marksii.At what stage of the audit is professional skepticism necessary? 2 marksiii.What effect will ‘exercising professional Skepticism’ have on the following1. Obtaining Sufficient Audit Evidence4 marks2. Obtaining Appropriate Audit Evidence4 marksiv.What can a firm do to enhance awareness of professional Skepticism to help obtainsufficient appropriate audit evidence? 

Aug 21 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions