- As per the APES section 110 subsection 114, a member should comply with the principle of confidentiality at any given circumstances and not disclose information without client’s permission and unless there is a professional requirement. James Bromley before retiring provides helpful information to the new accountant Jayne Godfrey with the permission from his client. Thus, it is not a violation of the ethical principles.(“Code of Ethics – Institute of Internal Auditors (Australia)”, 2019)
- An Audit Manager is a highly qualified person who not only has knowledge about the different accounting standards but also has long-term working experience. Fred Hingarra is an inexperienced auditor. Thus it is unethical for him to be an Audit Manager.
- According to APES 110 subsection 115 and R115.2, exaggerated claims for the services offered is not an acceptable professional behaviour and thus the Asquith Accountants violates the ethical principles by advertising about their work.
- Going with the fundamental principle of APES section 110 such as Integritywhich means that Amy Harriss should, at all times, be honest in all her professional activities and relationships; Objectivity which means Amy should not compromise her judgement due to any biasness or under any influence; and Confidentiality which means that she should maintain confidentiality of the information that she has knowledge about, due to her professional activities. Since Amy’s firm does not audit the athletic club, Amy can work as a treasurer in the club without violating the ethical principles if she follows the 3 principles mentioned above. (“APES 110”, 2019)
- In this case the ethical principles is not violated since the client’s expectation to pay only after getting an appropriate final report is justified.
- David Dale is asked to provide not only new clients but also their information in return of a commission 5% on each client. This is ethically wrong since he will have to disclose personal information and thus violates the general ethical principles of APES section 110 subsection 114. (Kaptein, 1998)
- Ellen Davis who had worked as an accountant in Jenkins Ltd. will also be a part of the Audit team for the company. This creates a Self-Review threat since Ellen is aware of the internal affairs. (“Threat To Auditor Independence Accounting Essay”, 2019)
- In this case John Dargin is not under any threats of independence.
- This is a normal case. The Chocolate Company has invited to visit its second shop does not cause any threat.
- Two kinds of threat to independence occur in this case- Self-Interest Threat and Intimidation Threat; since The Expert Travel Company advises the auditor to be flexible. Here the auditor has a fear of loosing his client if he does not obey him. (Mbwambo, 2019)
- This is the case of Familiarity threat since a member of the audit team Elaine Ong is engaged to the senior account of Elmtree ltd. James Bing.
- Diane Polo, senior auditor of the auditing team and Elise Lift, senior accountant from Ranger Ltd. and few other members play softball in the same team. Thus, they have a long term association with each other and therefore creates a Familiarity threat. (Millichamp & Taylor, 2012)
Contents of an Audit Report (“What Is Included in Audited Financial Statements?”, 2019)
- Title: Should mention ‘Independent Auditor’s Report’.
- Addressee
- Responsibility of the Management for Financial Statements
- Responsibility of the Auditor: to express unbiased opinion
- Opinion: Modified opinion or unmodified opinion
- Other Reporting responsibility
- Signature of Auditor
- Place of Signature
Opinion in Audit Report
Two kinds of opinions are found:
- Unmodified Opinion (also called Unqualified report): Issued for any audit where the financial statements show a true view of the operations in an organisation having no misstatements.
- Modified Opinion (also called Qualified report): If the auditor concludes that the financial statements contains misstatements he may issue a Modified Opinionin the audit report.
There are three kinds of modified opinions which are issued as per circumstances (“Auditor’s Report”, 2019):
- Adverse Opinion: Issued when
- The auditor finds out the impact of the misstatements is not so high; or
- The auditor is not able to find sufficient and appropriate evidence yet concludes indications of material misstatements in the financial statement.
- Qualified Opinion: It is issued when evidence is obtained that there are material misstatements in the financial statements with high impact.
- Disclaimer of Opinion: It is to be issued when the auditor is unable to find sufficient or appropriate evidences and is unable to form any opinion and so he disclaims from providing an opinion on the financial statements which has high impact of material misstatements.
References
APES 110. (2019). Retrieved from https://www.cpaaustralia.com.au/professional-resources/accounting-professional-and-ethical-standards/apes-110-code-of-ethics-for-professional-accountants
Auditor’s Report. (2019). Retrieved from https://www.investopedia.com/terms/a/auditorsreport.asp
Code of Ethics – Institute of Internal Auditors (Australia). (2019). Retrieved from https://www.iia.org.au/technical-resources/professionalGuidance/codeOfEthics.aspx
Kaptein, M. (1998). Ethics management. Dordrecht: Kluwer Academic Publishers.
Mbwambo, E. (2019). THREATS TO AUDITORS INDEPENDENCE. Retrieved from https://www.academia.edu/9406967/THREATS_TO_AUDITORS_INDEPENDENCE
Millichamp, A., & Taylor, J. (2012). Auditing. Andover, Hampshire: Cengage Learning EMEA.
Threat To Auditor Independence Accounting Essay. (2019). Retrieved from https://www.uniassignment.com/essay-samples/accounting/threat-to-auditor-independence-accounting-essay.php
What Is Included in Audited Financial Statements?. (2019). Retrieved from https://smallbusiness.chron.com/included-audited-financial-statements-68881.html
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
