You are the audit manager in the audit firm Price water coopers.One of your audit clients is Salam Fresh who are specialising in the manufacture and supply of food products. Salam Fresh have been an audit client for a period of 5 years and you have been the manager of the audit firm since 3 years. Now you are planning for the audit for the year ending 31 December , 2021 and conducted an initial meeting with the directors of the company and 0btained the following inofrmation:Salam Fresh is attempting to obtain a listing in a recognized stock exchange. For that, as a requirement, the company has organized an internal audit committee, even though no any further action has been taken. The public is unaware about the plan of listing of the company in stock exchange.You have been asked to prepare the financial statements of the company, as in previous years.As the auditors of the company, you are invited to attend an evening reception in a hotel, where the company will be presenting the listing arrangements to banks and existing major shareholders.The company indicated to pay the fee for taxation services rendered for the year 31 December,2015 which was not paid.You have inherited 5% of Salam Fresh company’s share capital.Required:Identify an explain the relevance of any factors that may threaten the independence of the Price water cooper’s in audit of the Salam Fresh company’s financial statements for the year ended 31 December 2021. Briefly explain how each threat can be managed.

Answered: alam Fresh who are specialising in the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are the audit manager in the audit firm Price water coopers.One of your audit clients is Salam Fresh who are specialising in the manufacture and supply of food products. Salam Fresh have been an audit client for a period of 5 years and you have been the manager of the audit firm since 3 years. Now you are planning for the audit for the year ending 31 December , 2021 and conducted an initial meeting with the directors of the company and 0btained the following inofrmation:

Salam Fresh is attempting to obtain a listing in a recognized stock exchange. For that, as a requirement, the company has organized an internal audit committee, even though no any further action has been taken. The public is unaware about the plan of listing of the company in stock exchange.
You have been asked to prepare the financial statements of the company, as in previous years.
As the auditors of the company, you are invited to attend an evening reception in a hotel, where the company will be presenting the listing arrangements to banks and existing major shareholders.
The company indicated to pay the fee for taxation services rendered for the year 31 December,2015 which was not paid.
You have inherited 5% of Salam Fresh company’s share capital.

Required:

Identify an explain the relevance of any factors that may threaten the independence of the Price water cooper’s in audit of the Salam Fresh company’s financial statements for the year ended 31 December 2021. Briefly explain how each threat can be managed.

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Audit refers to the examination of the present situation of an organization irrespective of it's size or legal form whether it has been incorporated or not.

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