Violation of Principles
Mordale Accounting firm has clearly violated the ‘Principle of Confidentiality’ as per Section 140 of APES 110 Code of Ethics for Professional Accountants. This principle states that the members should restrict themselves from disclosing the professional information outside the firm or to the third parties without a specific or proper approval from their clients (Martinov-Bennie and Mladenovic, 2015).
As per the given situation, Jan Dungog a CPA has been appointed by a local accounting firm without informing her previous employer. As per section 120 ‘Objectivity ‘ of APES 110 Code, the members should not compromise their business or professional judgment due to bias, undue influence of others or conflict of interest.
As per the given situation, Wendell Sailor has violated section 110 ‘Integrity’ of APES 110 Code which imposes the obligations on the members that they should be honest and straightforward in all their professional and business relationships.
As per the given case, Judith Durham has violated the principles of Section 220 ‘Conflict of Interest ‘ of Part B of APES 110 Code. It states that the members in public practice should take proper steps to assess the situations which could pose a conflict of interest with the fundamental principles.
Ernie Dengate has clearly violated the principles of section 110’ Integrity ‘ which imposes an obligation on its members to be straightforward and honest in all the professional and commercial dealings.
Fred Nerk should be straightforward and honest in all his professional and commercials dealings. As he provides audit and non audit services to his clients so he should not knowingly associate with the reports, communications and returns which contain misleading statements .
Allgood Chartered Accounting firm should maintain confidentiality as per section 140 of the APES 110 code. They should restrict themselves from disclosing any confidential information which is acquired through commercial and business relationships (APESB, 2017).
James Jameson has clearly violated the principles of section 150 ‘Professional Behavior’ of APES 110 code as this principle imposes a condition on all its members to comply with the applicable laws and regulations. They must avoid any omissions and commissions which would bring disregard to the profession.
In the given case, the auditor should provide a qualified opinion as they were not able to obtain confirmations from eight consumers of the client.
The auditor would give a disclaimer opinion as he was restricted by the client to verify the property, plants and equipment which constitute 35% of the total assets. It would be issued due to the absence of insufficient assistance from the management (Newton et al., 2015).
The auditor would issue an adverse opinion as the management has not included the contingent liability in its statements. It is a case of gross misstatement and a fraud in preparation of the financial records of the company.
The auditor would issue a disclaimer opinion as the management has failed to apply any internal controls for the recording of the cash transactions conducted in the company.
The auditor shall issue an unqualified opinion as the information presented in the financial statement is free from any errors.
The auditors will issue an adverse opinion as the company has not followed the Australian Accounting Standards for preparation of its financial statements since its inception.
The auditor will issue a qualified opinion as the client has not followed the Australian Accounting Standards by following the LIFO accounting method of inventory (Tsipouridou and Spathis, 2014).
The auditor will issue an unqualified opinion along with an ‘other matter’ paragraph which will explain the reasons for the doubt regarding the continuation of the client as a going concern.
References
APESB(2017) Compiled APES 110 Code of Ethics for Professional Accountants[online]. Available from: https://www.apesb.org.au/uploads/home/20092017152005_Compiled_APES_110_Sept17.pdf [Accessed 12th October 2018].
Martinov-Bennie, N. and Mladenovic, R.( 2015) Investigation of the impact of an ethical framework and an integrated ethics education on accounting students’ ethical sensitivity and judgment. Journal of Business Ethics. 127(1), pp.189-203.
Newton, N.J., Persellin, J.S., Wang, D. and Wilkins, M.S. (2015) internal control opinion shopping and audit market competition. The Accounting Review. 91(2), pp.603-623.
Tsipouridou, M. and Spathis, C.(2014) Audit opinion and earnings management: Evidence from Greece. In Accounting Forum . 38(1), pp. 38-54.
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