Auditing and Assurance

This article discusses various scenarios that have the potential to violate audit ethical principles. It covers topics such as APES 110, Section 260, Gifts and Hospitality, APES 110, Section 140, Confidentiality, APES 110, Section 130, Professional Competence and Due Care, and more. The article also provides solutions to these scenarios. Course code, course name, and college/university are not mentioned.

Running head: AUDITING AND ASSURANCE
Auditing and Assurance
Name of the Student:
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Table of Contents
Answer to Question 1.................................................................................................................2
Part A.....................................................................................................................................2
Part B......................................................................................................................................2
Part C......................................................................................................................................3
Part D.....................................................................................................................................3
Part E......................................................................................................................................4
Part F......................................................................................................................................4
Answer to Question 2.................................................................................................................5
First Situation.........................................................................................................................5
Second Situation.....................................................................................................................6
References..................................................................................................................................7

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Answer to Question 1
Part A
It is gathered from the offered information the senior audit partner of the “Musical
Company Pvt Ltd” is Peter Sung. It is also observed from the case that “Dave Thompson”,
the CEO of the organization has considered to offer Peter Sung with the offer to attain tickets
of the upcoming two concerns at a discount rate of 25% because of his long-term relation
with the organization. This situation has led to increasing the potential of developing a
violation threat regarding audit principles. Certain facts are signified by “APES 110, Section
260, Gifts and Hospitality” that this might result in threat regarding non-compliance with
necessary ethical principles of audit in a situation where auditor attains any special offer,
hospitality as well as gifts from the audit partner.
It also signifies that such case can be from the resulting violation of “APES 110,
Section 110, Integrity” for such standard generates obligation on the auditors to remain
honest in al the type of professional association. Peter Sung case can be explained in
consideration to the conducted discussion. It might also be gathered that abiding by “APES
110” discussion indicated that Peter Sung can cause violation of integrity guidelines
explained within “APES 110” in a situation where he individual accepts the purchase offer of
tickets at 25% that can impact the basic audit profession based ethical guidelines
(Apesb.org.au 2018).
Part B
It has been observed from the observed situation that Jana Went is carrying out the
audit of Gerroa Company for the first time. Moreover, it has also been gathered from such
case that Jana Went has been involved in carrying out auditing of several other orgaanzations
within the same sector. This secifuc condition has attained an increased potential for violation

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of importantethical audit profession-based principles. In consideration to this condition, it
must also be explained that “APES 110, Section 140, Confidentiality” imposes increased
commitment to auditors that can refrain them from revealing certain business information
which is confidential to its audit consumers to any member outside the organization devoid of
any authority (Simnett, Carson and Vanstraelen 2016). This is unless there exist any duty or
professional right in disclosing them. Such regulation is observed to be associated with the
recent condition of Jana Went.
Part C
Based on the necessary information provided in the case, Jack Dack has the role to
install a new technique of computer inventory in order to maintain production along with
inventory records. For the reason that Jack does not have any expertise within such type of
job, he has employed a computer inventory consultant for such position. Conversely, because
of increasingly technical nature along with less time, Jack provides such implementation
program devoid of analysing the consultants’ work. Such situation has every potential for
violation of the audit ethical guideline. Based on the guidelines of APES 110, Section 130,
Professional Competence and Due Care, it is an important responsibility of the auditors that
in attaining suitable technical capabilities and knowledge is necessary for offering audit
consumers with suitable audit services (Louwers et al. 2015). Along with that, such
regulation imposes certain obligation on auditors in maintaining diligent conduct based on
implemented technical and professional standards.
Part D
Based on such information, four key charter accountant companies are participating
within the quality assurance working paper analysis along with the review program that
encompass the review of working papers of another company. This also considers explaining
the pros and cons of auditprocesses. It is also required to be explained that such situation has

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a potential for audit ethical principles violation. Programs on quality assurance are better for
audit companies s it facilitates in enhancing the audit process quality. In such situation, it is
required to consider that the confidentiality part of overall program of quality assurance.
“APES 110, Section 140, Confidentiality” imposes necessary obligation on auditors to
reframe themselvesto disclosecertainconfidential business information of audit consumers to
any third part external to the organization. This is in lack of certain authority unless there are
professional right or disclosing duty. For this reason, the ethical threat in current case can be
elaborated with APES 110 regulation (Soh and Martinov-Bennie 2015).
Part E
Based on the provided information, Johan Geldens is positioned as a charter
accountant and the owner of an insurance company for supporting its services such as
taxation, superannuation along with auditing. The individualhas appointed a highly skilled
manager, Janina Borg, who operates an insurance agency business. This is the reason for
which Johan Geldens asked Janina to analyze the suitability of its consumer’s insurance.
Such situation has a likability of violation regarding audit ethical principles. “APES 110,
Section 220, Conflicts of Interests” exerts an obligation on the auditors in recognizing and
considering certain important conditions that has efficiency in resulting to interest conflict. In
the given condition, interest conflict is observed to take place as Johan Geldens is offering
explanations on client’s insurance adequacy which signifies the internal control inefficiency
within consumers business (Knechel and Salterio 2016).
Part F
Based on the analysis of the current condition, Edith Bailey carries out an effective
audit operation within the orgaanzations along with offering certain non-audit services to the
consumers at the same time with the management advisory along with the taxation-based
services (Kend, Houghton and Jubb 2014). The individual has been carrying out all such

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services for over the past ten years for the reason that there are just two partners along with
two accounting companies within the town. The existence of certain likability for the
violence of audit ethical principles has been observed in the provided case scenario.
Answer to Question 2
First Situation
It has been gathered the casegiven that Keith Barnes has been offering necessary audit
services for Andrew Capizzi that a Charter AccountingOrganization for the past ten years and
has initiated carrying out audit of “Maitland Coal Company”. It might also be gathered from
such case that the audit partner employs the cheapest legally allowed technique in disposing
waste along with that it has not implemented the new anti-pollution law set by the
government. At the same time, there is considered to be certain publication on few
unfavorable articles regarding the organization (Fuhrmann et al. 2017).
While offering an effective audit operation, one major factor for the auditors is to
consider certain audit independence. The existence of five distinct type of threats regarding
audit independence can be observed that includes advocacy, self-review, familiarity along
with intimidation threat. It is also deemed necessary for the auditor that forcarrying out the
audit operation in a particular manner is necessary so that there is less threat on audit
independence. It is also required to be elaborated that there are few examples when the audit
client management generates certain pressure on the auditor so that they might not
objectively act and such factor results in treat of audit independence regarding objectivity
(Farooq and De Villiers 2017). Conversely, in the given condition, it can also be evidenced
that there are any perceived or actual pressure from the management’s side in order to refrain
auditors from objectively acting.

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Second Situation
The existence of certain type of threat regarding audit independence an be observed
within the current situation. It is explained in the current situation that the CEOof Moonies,
Kirk Wilson has not considered the overall payment of 20% of the audit fees in previous
year. Moreover, the individual has considered making the overall payment after he attains his
fees. It is also evidenced from the case that the CEO is attempting to generate pressure on
Ken Smithby not considering fees payment so that he offers favorable audit opinion to the
organization. Such factor can result in the threat of intimidation on auditor’s independence
based on “APES 110, Section 100.12, Threats and Safeguards” for such section indicates that
there can be audit independence threat in salutation that the auditors are refrained from acting
objectively within any pressure (Edgley, Jones and Atkins 2015).
Additionally, it can also be observed that Emma Feeney has offered the organization
with necessary auditing services for the previous four months when the previous individual
was on a leave. It is also required to be explained that such factor might result in the
development of “Self-review Threat: in the audit independence based on “APES 110, Section
100.12” (Bradbury, Raftery and Scott 2018). This is for the reason that such regulation
indicates that there can be auditor’s independence threat at the time an auditor does not
consider analyzing the judgements or results of the past audit partner. It has also been
gathered that Teena Dean serves as the audit partner of Artarmon Accountants and she is the
daughter of the organization’s managing director. Such aspect can result in development of
“Familiarity Threat of Audit Independence” because existence of association among audit
client and partner (Arens et al. 2015).

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References
Apesb.org.au., 2018. APES 110 Code of Ethics for Professional Accountants. [online]
Available at: https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf
[Accessed 23 Sep. 2018].
Arens, A.A., Elder, R.J., Beasley, M.S. and Jones, J., 2015. Auditing: The Art and Science of
Assurance Engagements. Pearson Canada.
Bradbury, M.E., Raftery, A. and Scott, T., 2018. Knowledge spillover from other assurance
services. Journal of Contemporary Accounting & Economics, 14(1), pp.52-64.
Cohen, J.R. and Simnett, R., 2014. CSR and assurance services: A research agenda. Auditing:
A Journal of Practice & Theory, 34(1), pp.59-74.
Edgley, C., Jones, M.J. and Atkins, J., 2015. The adoption of the materiality concept in social
and environmental reporting assurance: A field study approach. The British Accounting
Review, 47(1), pp.1-18.
Edgley, C., Jones, M.J. and Atkins, J., 2015. The adoption of the materiality concept in social
and environmental reporting assurance: A field study approach. The British Accounting
Review, 47(1), pp.1-18.
Farooq, M.B. and De Villiers, C., 2017. The market for sustainability assurance services: A
comprehensive literature review and future avenues for research. Pacific Accounting
Review, 29(1), pp.79-106.
Fuhrmann, S., Ott, C., Looks, E. and Guenther, T.W., 2017. The contents of assurance
statements for sustainability reports and information asymmetry. Accounting and Business
Research, 47(4), pp.369-400.

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Kend, M., Houghton, K.A. and Jubb, C., 2014. Competition issues in the market for audit and
assurance services: are the concerns justified?. Australian Accounting Review, 24(4), pp.313-
320.
Knechel, W.R. and Salterio, S.E., 2016. Auditing: Assurance and risk. Routledge.
Louwers, T.J., Ramsay, R.J., Sinason, D.H., Strawser, J.R. and Thibodeau, J.C.,
2015. Auditing & assurance services. McGraw-Hill Education.
Simnett, R., Carson, E. and Vanstraelen, A., 2016. International archival auditing and
assurance research: Trends, methodological issues, and opportunities. Auditing: A Journal of
Practice & Theory, 35(3), pp.1-32.
Soh, D.S. and Martinov-Bennie, N., 2015. Internal auditors’ perceptions of their role in
environmental, social and governance assurance and consulting. Managerial Auditing
Journal, 30(1), pp.80-111.