The following scenario relates to questions 46–50
You are the audit manager of Cast & Co and you are planning the audit of Crust Financials
Co (Crust), which specializes in the provision of loans and financial advice to individuals and companies. Cast & Co has audited Crust for many years.
The directors are planning to list Crust on a stock exchange within the next few months and have asked if the audit engagement partner can attend the meetings with potential investors. In addition, as the finance director of Crust is likely to be quite busy with the listing, he has asked if Cast & Co can produce the financial statements for the current year.
During the year, the assistant finance director of Crust left and joined Cast & Co as a partner. It has been suggested that due to his familiarity with Orange, he should be appointed to provide an independent partner review for the audit.
Once Crust obtains its stock exchange listing it will require several assignments to be undertaken; for example, obtaining advice about corporate governance best practice. Cast & Co is very keen to be appointed to these engagements, however, Crust has implied that in order to gain this work Cast & Co needs to complete the external audit quickly and with minimal questions/issues.
The finance director has informed you that once the stock exchange listing has been completed, he would like the engagement team to attend a weekend away at a luxury hotel with his team, as a thank you for all their hard work. In addition, he has offered a senior member of the engagement team a short-term loan at a significantly reduced interest rate.
Crust is aware that subsequent to the stock exchange listing it will need to establish an audit committee, and has asked for some advice in relation to this.