Ramesh Sharma was Chief Finance Officer of A Ltd for the period 1 Shrawan 2064 to 15 Ashad, 2069. He joined XYZ Chartered Accountant firm from 1 Shrawan 2069 as Senior Audit Manager. A Ltd. has approached the firm on 15 Shrawan 2069 for the audit of accounts for the year 2068/69 with Ramesh Sharma as Engagement Manager of the audit team. Please provide your opinion on what the audit firm should do?
Ramesh Sharma was the Chief Finance Officer of A Ltd. for almost entire year 2068/69. He has left A Ltd just a month before the audit firm was approached A Ltd for audit of 2068/69 and proposes his name to be engaged as engagement manager in the audit team. This situation may result into self-interest, self-review and familiarity threat to the firm. Hence the firm should request A Ltd. that the firm cannot assign Ramesh as an audit team member. If A Ltd does not accept the audit team without Ramesh as senior member in the audit team from the firm, the audit firm should not accept this engagement.