Auditing and Assurance Services Exam

This assignment consists of a series of solved questions related to Auditing and Assurance Services. It covers topics such as ethical considerations for auditors, independence threats, different audit opinions, and the impact of accounting methods on financial statements. The solutions provide detailed explanations and demonstrate how to apply auditing principles to real-world scenarios.

Running head: AUDITING AND ASSURANCE SERVICES
Auditing and Assurance Services
University Name
Student Name
Authors’ Note

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AUDITING AND ASSURANCE SERVICES
Table of Contents
Solution to Question 1:...............................................................................................................2
Solution to Question 1(a):..........................................................................................................2
Solution to Question 1(b):..........................................................................................................2
Solution to Question 1(c):..........................................................................................................3
Solution to Question 1(d):..........................................................................................................4
Answer to Question 2.................................................................................................................4
Answer to Question 2 (a):..........................................................................................................4
Answer to Question 2 (b):..........................................................................................................4
Answer to Question 2 (c):..........................................................................................................4
Answer to Question 3:................................................................................................................5
Answer to Question 3 (a):..........................................................................................................5
Answer to Question 3 (b):..........................................................................................................5
Answer to Question 3 (c):..........................................................................................................5
Reference....................................................................................................................................7

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Solution to Question 1:
Solution to Question 1(a):
It can be hereby stated promise of tax refund appears to be too good to be true. Even though,
majority of accounting profession is sincere and honest, there exist a small number of
preparers of tax who try to draw in potential clientele by promising refunds and that is
unethical. According to APES 110 Code of Ethics for Professional Accountants, Section 130,
this specific act of Berowra Accountants has breached the principle of “Professional
Competence and Due Care” (William Jr et al. 2016).
Solution to Question 1(b):
The athletic club is a not for profit corporation and the work of auditor of large corporation
that is Jamie Harvey has no association with the works of athletic club. Therefore, there is no
violation of the ethical regulations as per APES 110 Professional Appointment under section
210 (Arens et al. 2012).
Solution to Question 1(c):
The Pymble Accountants undertook the audit activity of the firm Monlec Ltd. The assessor
has the need to present unbiased audit opinion as per the directives mentioned under APES
110 (Principle of Objectivity) mentioned under section 120 (William Jr et al. 2016). In this
case, the management of Monlec Ltd is asking for desirable as well as favourable audit report
from the accounting firm. Thus, in case if the auditor presents a biased opinion, then there
will be violation of auditing ethical principle.

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Solution to Question 1(d):
Winton Accountants have divulged classified information regarding Motoring Services to
particularly Chadwick Chartered Accountants by delivering all audit documents. Therefore,
Winton Accountants is said to have violated principles of privacy as per APES 110 Principles
of Confidentiality as per Section 140 (George et al. 2014).
Answer to Question 2
Answer to Question 2 (a):
Thornleigh Accountants have positioned Jane Davis for the assessment of Jenkins Ltd in
place of the Leona Ng due to ill health of Leona Ng. This essentially directs towards threat of
independence of audit for Thornleigh Accountants according to APES 110, Self-review
Threat, Section 100.12 (George et al. 2014).
Answer to Question 2 (b):
In the given case, the assessors can feel stressed by the client of the audit in a bid to agree to
the judgement of clients of audit. By presenting the papers, Winmalee Ltd can generate stress
on John for delivering desirable report of audit. Therefore, according to APES 110, Section
200.8, this particular circumstance can generate intimidation threat to the independence of the
assessor (Arens et al. 2012).
Answer to Question 2 (c):
In this case, the chocolate corporation might be striving to influence auditors and their
judgement on the assessors by way of inviting them to different entertainment activities since
their ulterior intention can be to arrive at desirable audit opinion. Thus, in accordance to the

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directives stipulated under APES 110, Self-interest Threat, Section 100.12, there can be threat
to independence of auditors (George et al. 2014).
Answer to Question 3:
Answer to Question 3 (a):
Conor Company has not manipulated the financial assertions in order to conceal poor debt
paying state of affairs (George et al. 2014). Therefore, the assessor will issue Unqualified
Opinion for the corporation Conor Company.
Answer to Question 3 (b):
As per the given case, the corporation is supposed to pursue FIFO method for the purpose of
inventory valuation but instead they have taken up LIFO methods since their parent
corporation of America utilizes it. The variances and differential effect of the FIFO and the
LIFO has affected inventory valuation that in turn affected materiality of the statements
(George et al. 2014). Barring inventory, there is no sign of material misstatement in the
financial assertion of corporation and there subsists no compliance issue. Thus, auditor will
necessarily issue qualified audit opinion.
Answer to Question 3 (c):
The company Victorian Manufacturing Company has not undertaken valuation of their
warehouse for the past five years since the directors believe that there is not any alteration in
particularly market value. Therefore, directors are considering major suppositions that might
not be appropriate and can lead to material misstatement. Therefore, the auditors during
review have the need for fair value of particularly land as well s buildings. Essentially, the

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auditors might fail to provide appropriate audit review since it restricts their entire
examination procedure. It is for this reason; the assessor will necessarily issue Disclaimer of
opinion since they are unable to whole report (Arens et al. 2012).

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Reference
Arens, A.A., Elder, R.J. and Mark, B., 2012. Auditing and assurance services: an integrated
approach. Boston: Prentice Hall.
George, G., Jones, A. and Harvey, J., 2014. Analysis of the language used within codes of
ethical conduct. Journal of Academic and Business Ethics, 8, p.1.
William Jr, M., Glover, S. and Prawitt, D., 2016. Auditing and assurance services: A
systematic approach. McGraw-Hill Education.