Integrity, objectivity, and independence

Question 1

Self-interest threats

Answer 1

Audit partner leaves to take up employment with a client: firm should resign as auditor for two years.
Fee dependence (non-listed client): disclose if income > 10%; cannot act as auditor if income > 15%.
Fee dependence (listed client): disclose if income > 5%; cannot act as auditor if income > 10%.

Question 2

Self-review threats

Answer 2

Most services to audit client: Allowed with safeguards for non-listed clients. Prohibited for listed clients.

Question 3

Familiarity threat

Answer 3

Non-listed engagement parter: review independence after 10 year.
Listed engagement partner: roll off after 5 years.
Quality control engagement partner: roll off after 7 years.
All no return within 5 years.

Question 4

Advocacy threat

Answer 4

Legal services to audit client: Allowed with safeguards for non-listed clients. Prohibited for listed clients.

Question 5

Conflicts of interest.

Answer 5

Try to resolve internally, obtain advice from the ICAEW, seek legal advice, and consider resignation.