(c) Ethical issues
Generally up to 1 mark for each relevant matter discussed:
– Assisting in the tax investigation creates advocacy threat (1 mark where risk is explained)
– Assisting in the tax investigation creates self-review threat (1 mark where risk is explained)
– Extent of threat lessened because another firm provided the tax planning
– Need to consider the materiality of the matter to the financial statements
– If matter is immaterial, then the service can be provided as long as safeguards in place (1 mark for
each safeguard suggested)
– Where matter is material, the service should not be provided
– Appointment of audit partner to audit committee creates objectivity threat
– Code prohibits appointment of audit firm member as director of audit client
– Matters to be discussed with client’s audit committee and the audit firm’s ethical partner
Maximum marks 8
Professional marks
Generally 1 mark for heading, 1 mark for introduction, 1 mark for use of headings within the briefing notes,
1 mark for clarity of comments made
Maximum marks 4
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