Problem
I. Darryl West is the current partner planned to head the audit for Gold Standard Bank for the coming fiscal year, he has worked with them for the prior two audits and has a wealth of experience. Darryl was recently promoted to partner. Also recently, Darryl's sister got hired to work within the internal control department at Gold Standard.
i. What are your recommendations to Darryl regarding his potential client, Gold Standard Bank?
ii. If no changes are made to the existing plan for the upcoming audit, what are your concerns?
II. The audit firm decides that Darryl should remain as the lead partner on the engagement for Gold Standard. During the audit process, Darryl does not act with due care relating to work his sister is involved with. This results in the audit opinion being incorrectly stated.
i. Relating to the client, Gold Standard. What legal recourse do they have? What proofs are they required to bring?
ii. Relating to shareholders. What legal recourse do they have? What proofs are they required to bring?