(b) Mumbai Co
Generally 1 mark for each well explained ethical and professional threat; ½ mark available for each
recommended safeguard:
– Self-review threat
– Management responsibility: self-interest and familiarity threat
– No safeguards which can reduce management threat
– Possible safeguards to avoid management threat
– Restriction on internal audit services for listed clients
– Competence if review is not related to financial controls
– Responsibilities of auditor in relation to internal controls
– Possible deficiency in external audit procedures
– Nature/severity of deficiencies not clear
Maximum marks 8
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