When sourcing third parties for auditing services, what should organizations consider regarding the auditors' independence?  A. Their relationship with company management  B. Their track record in audit engagements  C. Their independence and impartiality  D. Their adherence to professional codes of conduct

How can organizations ensure the quality of third-party auditing services?  A. Implementing regular performance evaluations  B. Establishing strong contractual agreements  C. Conducting regular audits of auditing firms  D. Providing auditors with access to all company data

For the following independent situations, identify and discuss issues related to external auditors' ethics and independence under APES110 Code of Ethics for Professional Accountants and Corporations Act.  State the most relevant principles/regulations and apply them to each case.  Where appropriate, advise the appropriate course of action for the auditor. Hint: In your answer, (a) identify the ethical issue and discuss the most relevant threats to auditor independence, (b) state the most applicable rules/regulations and (c) suggest safeguards where applicable.(1)  After the audit team completed most of the work for the current year audit, the CEO (Chief Executive Officer) of the audit client (which is a publicly listed company) offers to give every audit team member a diamond ring to thank them for their work. (4 marks)(2)  The audit client is a publicly listed company, and its Chief Executive Officer (CEO) asks the audit firm’s management advisory division to provide advice regarding the valuation of intangible assets which constitute 20% of the company's total assets. (6 marks)

Suppose you have just joined an office of an accounting firm, MC Partners, that provides audit and various types of non-audit services to its clients. Within a few months of joining, you discover four pieces of information regarding one particular office client, Davey International, that could present severe threats to auditor independence. You know of the conceptual framework of the Code of Ethics that guides auditors on identifying threats to auditor independence. Required Identify the most significant threat to auditor independence likely to arise from each of the four pieces of information, summarized below. Explain your reasoning: The office earns 80 percent of its total office revenue from providing several lucrative types of non-audit services to Davey International. (1.5 marks) The taxation division of the office provides tax planning services to Davey International to increase Davey’s tax savings. The resulting tax strategies significantly affect financial reporting, including estimates of income taxes. The audit division of the office does not have significant expertise in taxation and has traditionally consulted senior staff in its taxation division to evaluate the quality of tax reporting in clients. (1.5 marks) The senior managing partner of the office met with parliamentary staff assisting government lawmakers. During this meeting the partner promoted the use of language in an upcoming bill proposing amendments to legislation that would favor the business interests of Davey International. (1.5 marks) The audit engagement teams typically interact significantly with the Chief Financial Officer (CFO) in their client firms. A long-serving and highly-respected audit partner left his position at MC Partners three years ago and recently been appointed as the new CFO of Davey International. (1.5 marks)

Which of the following choices best describes the main role of independent external audit for financial reporting? A) Independent external audit helps agents in getting their principal objectives. B) Independent external audit helps to provide quality signals to principals and helps distinguish superior from inferior agents. C) Independent external audit helps to provide quality signals to agents and helps distinguish superior from inferior principals. D) Independent external audit provides help in the provision of in-house facilities to auditors

True or false. The independent audit procedure has increased in popularity because there is a mutual benefit to customer and vendor in having an independent audit performed. To the customer, it provides some assurance that the vendor's control environment has been audited. The vendor, then, can say there's been an independent opinion that the customer's data is protected.