Problem
Your firm which has eight partners has been invited by Mr Smith, the managing director and majority shareholder of Battersby Co, to accept appointment as statutory auditor of the company. The present firm of auditors will not be re-appointed when its term of expires.
The principal activity of Battersby Co is the manufacture and distribution of healthcare products. Your firm has several companies operating In the healthcare sector in its client portfolio.
Mr Smith has requested that your firm assists with the preparation of the company's corporation tax computation, and provides consultancy services on and on-going basis in connection with his plans to grow to the business. He has also suggested that a partner in your firm joins the board of Battersby Co as a non-executive director.
Required
(a) Set out the matters, other than independence and objectivity, to be considered and the procedures to be performed in order to determine whether it is appropriate for your firm to accept appointment as statutory auditor of Battersby Co.
(b) Identify and explain the threats to independence and objectivity which may arise from the provision of the services requested by Mr Smith and state how these threats should be resolved.
Set out the benefits to audit firms and their clients of having audit and non-audit services provided by the same firm of accountants
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.