SECTION A - CASE 1: AQUAPURIFY NGO
AquaPurify NGO is a global charity providing clean water infrastructure in developing nations. You are the audit manager at Grant & Co. The audit for the year ended 31 March 20X6 is being planned. The audit engagement partner, Sarah Jenkins, has been on the engagement for seven years. AquaPurify recently received a massive government grant that requires a separate assurance report. The charity's finance director, a former Grant & Co audit manager who left the firm 18 months ago, has offered the audit team a complimentary luxury safari trip 'as a thank you for their hard work'. Furthermore, Grant & Co has been asked to provide internal audit services to AquaPurify.
Which of the following correctly identifies the ethical threat created by Sarah Jenkins serving as the engagement partner for seven years, and the appropriate safeguard?
ACCA · Question 02 · Audit Framework and Regulation
SECTION A - CASE 1: AQUAPURIFY NGO
AquaPurify NGO is a global charity providing clean water infrastructure in developing nations. You are the audit manager at Grant & Co. The audit for the year ended 31 March 20X6 is being planned. The audit engagement partner, Sarah Jenkins, has been on the engagement for seven years. AquaPurify recently received a massive government grant that requires a separate assurance report. The charity's finance director, a former Grant & Co audit manager who left the firm 18 months ago, has offered the audit team a complimentary luxury safari trip 'as a thank you for their hard work'. Furthermore, Grant & Co has been asked to provide internal audit services to AquaPurify.
How should Grant & Co respond to the offer of the luxury safari trip?
Answer options:
Accept the offer, provided it is disclosed to the audit committee.
Accept the offer only for junior team members who do not make key audit judgments.
The offer must be declined as it creates a significant self-interest and familiarity threat that cannot be reduced to an acceptable level.
Decline the offer, but request that the equivalent value be paid as an audit fee bonus.
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