VMC & Co., a firm of Chartered Accountants, has been auditing the financial statements of Reyox Ltd., a listed company, for the past 7 years. CA…
CA Final · Advanced Auditing, Assurance and Professional Ethics · RTP · September 2025
VMC & Co., a firm of Chartered Accountants, has been auditing the financial statements of Reyox Ltd., a listed company, for the past 7 years. CA Rajat, an engagement partner, has led the audit team throughout this period. A recent quality control review raised concerns regarding a familiarity threat, as CA Rajat has developed a close relationship with key management personnel of the client. Which of the following would be the most appropriate course of action for VMC & Co. to mitigate the threat of independence and objectivity in this case as per SQC 1 in this scenario?
Suggested Answer and Working Notes:
Correct Answer: Option (C)
Rotate the engagement partner and appoint another qualified partner to lead the audit engagement.
Topics: Standard on Auditing (SA), Quality Control
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