Critically Discuss the Strengths and Weaknesses of Sabic's Existing Csr Policy

APPENDIX A

 Ross Dunbar’s colleague’s reply to Andy Thompson’s letter

A.N Other

Scott Mclelland LLP
12, Scottish Passage
Edinburgh, EH12 6TS

Andy Thompson

Scottish Treats Ltd
Anselm House
Royal Parade
Edinburgh, EH1 2JZ

10th January 2016

Dear Andy,

My name is A.N Other and I am a partner and colleague of your friend, Ross and unfortunately, in light of your pre-existing long standing relationship since University days, it is not appropriate for him to be involved in any way with your company business should you choose to select Scott McLelland LLP as your auditor. Whilst Ross is your friend and may continue to be so, in terms of your relationship with this firm there is an immediate and apparent conflict of interest which needs to be assessed and quantified before any further business related or financial steps connecting our firms are made. This relates to Auditing Practise Board (APB) Ethical Standard 1  where it is crucial to recognise and assess situations which might impact an auditors’ objectivity (Financial_reporting_council, 2010a) To be clear, this safeguards everyone concerned and ensures that as a firm of auditors, we at Scott McLelland can complete all audit engagements in a satisfactory, objective and independent fashion.

 Moreover, as well as being one of the five partners in the firm, I am also the Ethics Partner, a role required in an audit firm in excess of 3 partners (Association_ofChartered_Accountants, 2016a) and as such my job is to ensure that all APB standards are respected and implemented (Financial_reporting_council, 2010b). This is why as soon as you expressed a genuine interest in engaging us as a potential auditor via written communication, Ross immediately passed your letter over to me.

As you can appreciate, governance and ethical issues are of paramount importance in terms of any auditing practice and ever since the issues surrounding the collapse Enron emerged in the 2000’s(Beattie and Fearnley, 2002) and the following the fall out from the recent financial crisis where impartiality of auditors has been identified as having a part to play (Agnew, 2014) regulations are becoming increasingly strict. In fact, should we as a firm become your auditor, we may only do so for a ten year period under new mandatory auditor rotation regulations to ensure impartiality and objectivity (Ewelt-Knauer et al., 2012).

Within this letter to you my intention is to answer the questions you raised in your original letter on a point by point basis and whilst it is not appropriate nor possible for your friend Ross to be your engagement auditor (Financial_reporting_council, 2010a), I do hope that the clarity of my answers will encourage you to employ our firm where another partner might oversee the audit engagement, following clarification that no conflict of interest or risk of impartiality exists. As a Ltd company you lack of familiarity with the audit process as often ltd companies are exempt from annual audits (Gov.uk, 2016) so I will break things down as much as possible(Gov.uk, 2016).