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  • June 2015 AA BETHAN OAK

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    MUHAMMAD FIKRI MOHAMAD NAZARALLAH
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    Beech & Co should appoint an alternative review partner instead of Bethan due to the familiarity threat from Bethan's significant seven-year relationship with the business. Bethan should also decline Willow's request to attend audit committee meetings to avoid a self-interest threat from taking on a managerial role. Beech & Co can assist Willow by reviewing candidate shortlists for a new non-executive director, but should not make the final hiring decisions to avoid a self-interest threat. If audit and non-audit fees from Willow exceed 15% of Beech & Co's income for two years, this should be disclosed to those charged with governance at Willow. A new audit manager should be appointed for Willow to address the

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    Beech & Co should appoint an alternative review partner instead of Bethan due to the familiarity threat from Bethan's significant seven-year relationship with the business. Bethan should also decline Willow's request to attend audit committee meetings to avoid a self-interest threat from taking on a managerial role. Beech & Co can assist Willow by reviewing candidate shortlists for a new non-executive director, but should not make the final hiring decisions to avoid a self-interest threat. If audit and non-audit fees from Willow exceed 15% of Beech & Co's income for two years, this should be disclosed to those charged with governance at Willow. A new audit manager should be appointed for Willow to address the

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    June 2015 AA BETHAN OAK

    Uploaded by

    MUHAMMAD FIKRI MOHAMAD NAZARALLAH
    Beech & Co should appoint an alternative review partner instead of Bethan due to the familiarity threat from Bethan's significant seven-year relationship with the business. Bethan should also decline Willow's request to attend audit committee meetings to avoid a self-interest threat from taking on a managerial role. Beech & Co can assist Willow by reviewing candidate shortlists for a new non-executive director, but should not make the final hiring decisions to avoid a self-interest threat. If audit and non-audit fees from Willow exceed 15% of Beech & Co's income for two years, this should be disclosed to those charged with governance at Willow. A new audit manager should be appointed for Willow to address the

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    © All Rights Reserved
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    of 2

    BEECH & CO

    THREATS SAFEGUARDS
    Since Bethan was asked to undertake the role An alternative review partner should be
    of independent review partner this year, the appointed. This is due to the fact that Bethan
    action will give rise to familiarity threat. This should not serve as the independent review
    is due to significant relationship that Bethan partner for a period of two years.
    and the business had established for the last
    seven years.

    Willow has been requesting Bethan to assist Bethan should politely decline the offer
    them by attending their audit committee made by Willow. This is because the
    meetings, as a non-executive director has consequences of this action might tarnish the
    recently left the company. This might lead to independency of Bethan.
    self-interest threat to arise. This is because
    the firm might be perceived to take on
    managerial role and this might change the
    objective.

    Willow has been asking Sandeep and the Beech & Co should not make managerial
    other partners at Beech & Co to help them in decisions such as finalizing the candidates
    recruiting a new non-executive director. This based on the interviews. However they can
    might give rise to self-interest threat since it assist in reviewing shortlist of candidates.
    involves audit firm to take part in managerial
    works.

    The total fees received by Beech & Co for the Beech & Co should assess whether audit and
    last year equated to 16% of the firm’s total non-audit fees would represent more than
    fee income. The current year’s audit fee has 15% of gross practice income for two
    not yet been confirmed. This might give rise consecutive years.
    to self-interest threat since it represent a big If the fees do exceed 15% then this should be
    portion of Beech & Co’s income. disclosed to those charged with governance
    at Willow.

    The audit manager for Willow has just A new audit manager should be appointed to
    announced that he is leaving Beech & Co to Willow and any work alrady undertaken by
    join Willow as the financial controller. This the previous manager should be
    might give rise to familiarity threat since he is independently reviewed.
    he already knows how the firm works and
    probably already establish a special
    relationship with the firm.

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