Andrew Smith has recently been employed as an auditor by a large audit firm in Glasgow, McIntosh & Co. When he goes over the records to familiarize himself with the clientele he finds an issue which...

Andrew Smith has recently been employed as an auditor by a large audit firm in Glasgow, McIntosh & Co. When he goes over the records to familiarize himself with the clientele he finds an issue which gives him cause for concern. One of the senior audit partners is responsible for two separate audit assignments, Thistle Enterprises and Tartan Promotions. When Andrew examines the records for both companies, he discovers that Tartan has tendered for a contract to undertake all promotional campaigns for Thistle. If the company were to win this contract it would be worth in excess of £750,000 to Tartan over a 5-year period. Andrew is further concerned about notes that show the partner has been asked to advise Thistle on awarding the contract.

Requirements

1. Put yourself in Andrew’s position:

 a. Do you think Andrew is correct to be concerned about the partner auditing both companies’ accounts? If so why?

 b. Are there any options which would resolve these issues?

c. What are the possible consequences of making these changes, both for the firm and the clients?