ASSIGNMENT DESCRIPTION

Your friend owns 10% of the shares in Builders plc, a publicly quoted construction company and approaches you for advice. He explains that that Builders plc is currently facing considerable business problems because of a lack of orders and has recently laid off 75% of its entire staff.

In the audit report for the company for the year ended 31.12.2010, the Auditors stated that, in their opinion, the financial statements gave a true and fair view. He is now worried that, because of the long standing business relationship between the Auditors and the Directors, they may not fully reflect the company’s current difficulties in their Audit Report for the year ended 31.12.2010.

Because of your studies, he feels you can explain to him all aspects of audit independence and audit objectivity as well as why a company like Builders plc should have an Audit Committee. He mentions the following points in your discussion:

o the meaning of auditor independence ;

o the importance of auditor independence

o the practical implications for the auditor in meeting the demands of this aspect of the audit role

o the areas of risk to Auditor Objectivity

o the related role of Audit Committees

He suggests that you write a paper which he can forward to the board of directors discussion at their next board meeting. He wants you to cover each of the points noted above so that his fellow board members become fully aware of his worries before the audit for the year ended 31.12.2010 is completed.

He asks you to present your paper in a very professional manner and to clearly include references to all sources quoted in your work.

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Other Information

Marks will be awarded in accordance with the following allocation:

Content total– including each of the above points 75%

Presentation; Referencing; Introduction and Conclusion 20%