ACCA Strategic Professional · Advanced Audit and Assurance (International) · Reports to those charged with governance and management

Kestrel Audit LLP audits Orion Foods, a listed company. The audit team has just completed the audit. The firm provided no non-audit services in the year, but a senior manager's spouse recently bought a small shareholding in Orion Foods, which was dealt with by removing the manager from the team before work began. Under ISA 260 (Revised) and the IESBA Code, what is the auditor's required communication with TCWG on independence?

The auditor should confirm compliance with independence requirements and communicate relationships and matters that may reasonably bear on independence, together with the safeguards applied, here the manager's removal from the team. Removal does not eliminate the duty to tell TCWG, who must be informed directly.

1. AState that the audit team and firm are independent, and communicate relationships and safeguards applied, such as removal of the manager from the team, that may reasonably bear on independenceCorrect
2. BNo communication is needed because the manager was removed from the engagement before any work began
3. CCommunicate only the audit fee, since fees are the sole independence matter relevant to TCWG
4. DCommunicate independence matters to management only, since the matter concerns the firm's internal staffing