(a). Any transaction that is identified by any one director as a related party transaction shall be subject to the related party transaction procedures;

1. any related party transaction shall be referred to the Audit Committee for review
2. the audit committee may determine that a related party transaction is sufficiently material to be referred to shareholders for approval
3. any related party transaction not designated as material under sub paragraph (c) above shall be subject to approval by the Board and any vote by the Board shall exclude those with a conflict of interest or any interest in the related party or the transaction;
4. where the Board (excluding those not entitled to vote under sub paragraph (d) above) does not unanimously approve the related party transaction, it shall be referred to the shareholders for approval; and
5. any related party transactions that are approved by the shareholders shall be identified in the annual report.
   (5 points at 2 marks each = 10 marks)

(b).

• Professional Responsibility and Accountability: In Ghana, auditors are required to have personal accountability for their work. The potential for personal liability ensures auditors take their responsibilities seriously and maintain high standards of integrity and professionalism. As a result, registering the firm as a limited liability company will shield the auditors from personal liability.
• Public Trust: Auditors play a crucial role in maintaining public trust in financial reporting. The possibility of personal liability enhances public confidence that auditors will perform their duties diligently and impartially.
• Independence and Objectivity: The structure of a limited liability company might create potential conflicts of interest that could compromise the independence and objectivity of auditors. The ICAG Act 2020 seeks to minimise these risks by requiring audit firms to be structured as partnerships or sole proprietorships.
• Partner Monitoring: In a limited liability company, partners who are not directly involved in a negligent audit are protected. Therefore, partners in a limited liability company have less incentive to monitor each other’s work and less incentive to invest in quality control systems.
  (10 marks)