Auditing Victorian Manufacturing Company
Added on 2020-05-16
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Running head: AUDITING AND ASSURANCEAuditing and AssuranceName of the StudentName of the UniversityAuthor’s Note
1AUDITING AND ASSURANCETable of ContentsAnswer to Question 1......................................................................................................................2Requirement [a]...........................................................................................................................2Requirement [b]...........................................................................................................................2Requirement [c]...........................................................................................................................3Requirement [d]...........................................................................................................................3Answer to Question 2......................................................................................................................4Requirement [a]...........................................................................................................................4Requirement [b]...........................................................................................................................5Requirement [c]...........................................................................................................................5Answer to Question 3......................................................................................................................6Requirement [a]...........................................................................................................................6Requirement [b]...........................................................................................................................6Requirement [c]...........................................................................................................................7References........................................................................................................................................8
2AUDITING AND ASSURANCEAnswer to Question 1Requirement [a]As per APES 110 Code of Ethics for Professional Accountants, Section 130, it is theobligation on the auditors to comply with the required laws and regulations of auditing. As perthe given situation, a special advertisement from Berowra Accountants can be seen in the localpaper providing the surety of tax refund foe their audit clients. It needs to be mentioned that taxrefund is only possible when the companies pay extra amount of tax than their tax liabilities andit has no connection with auditing. It is the responsibility of the auditor to ensure that thefinancial statements of the companies are free from material misstatements; in case it is not, thento provide audit opinion accordingly. Thus, from the above discussion, it can be observed thatBerowra Accountants has given the advertisement by braking the principles of auditing and thus,this action of them has violated the principle of Professional Competence as per APES 110(Nerandzic, Perovicy and Zivkov 2012). Requirement [b]As per APES 110 Professional Appointment, Section 210, the obligation is on theauditors to effectively determine the effect of their new professional contract on the fundamentalprinciples of audit profession (William Jr, Glover and Prawitt 2016). It implies that the auditorsneed to determine whether there is any negative effect of their appointment has on the auditprofession or not. Athletic clubs are considered as not-for-profit societies. In the providedsituation, it can be observed that Jamie Harvey, the auditor of a chartered accountant firm isbeing asked to hold the position of the treasurer of the local athletic club. In addition, JamieHarvey does the audit of large public organizations. Thus, it can be seen that the post if treasurerin the local club does not have any connection with the audit of large public companies. In
3AUDITING AND ASSURANCEaddition, there is not any threat involved in holding an position in any not-for-profit societies.Thus, based on the above discussion, it can be said that the action of Jamie Harvey has notviolated any audit ethical principle as per APES 110 (Leung et al. 2014). Requirement [c]APES 110 Principle of Objectivity, Section 120 puts the obligation on the auditors not tocompromise the audit judgment or audit opinion by coming under any kind of influence, conflictof interest, biasness and others. It is the responsibility of the auditors to deliver the correct andfair audit opinion as auditors are the representatives of investors and creditors. In the givensituation, it can be observed that the final payment of Pymble Accountants is depending on thedelivery of appreciate audit opinion. In this context, it needs to be mentioned that the‘appropriate’ audit opinion refers to the favorable audit opinion to the audit client. Thus, in thiscase, there can be two situations. In the first situation, there will not be any violation of auditprinciple in case the auditors provide correct audit opinion irrespective of the payment. This isthe desired situation. In the second situation, there will be the violation of auditing principle, incase the auditor provides Monlec Limited with favorable audit opinion. Thus, this action willviolate the Objectivity principle of audit as per APES 110. Requirement [d]According to APES 110 Principles of Confidentiality, Section 140, APES 110 puts theobligation on the auditors that it is their responsibility to maintain the confidentiality of auditinformation obtained at the time of providing professional services to the clients (Zadek 2013).However, the opposite of this rule can be seen in the provided case. The give situation states thatChadwick Accountants have received all the accounting papers from Winton Accounts. It needsto be mentioned that these accounting papers include the confidential financial information of the
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