John Bartram is the son of the factory manager of one of your firm's major audit clients, John Worst Foods Limited. John is studying accounting, with a specialisation in auditing at Holmes Institute. John applied for work during the summer where he could both earn money as well as gain first-hand experience in his area of interest. He is assigned to the audit of John Worst's Foods Limited where part of his audit work consisted of testing the internal controls of the cash payments and cash receipts system.
Q: What is the issue in this situation and what sections of the Act are bought into question? Is there something that should be in place with the audit firm?