Auditing and Professional Practices
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Added on 2021-04-21
Auditing and Professional Practices
Added on 2021-04-21
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Running head: AUDITING AND PROFESSIONAL PRACTICESAuditing and Professional PracticesName of the StudentName of the UniversityAuthor’s Note
1AUDITING AND PROFESSIONAL PRACTICESIntroductionAuditing refers to the process of inspecting the financial statements of the companies sothat it can be ensured that they are free from material misstatements (William Jr, Glover andPrawitt 2016). At the time of conducting the audit operations, the auditors are required to complywith all necessary auditing standards and principles. Non-compliance with these standards canlead to the breach of ethical principles. The auditors are responsible to provide correct auditopinion based on the result of audit procedures. Question 1Answer to [a]While conducting different audit procedures in the companies, the obligation is on theauditors to make compliance with the required ethical standards. Accounting Professional andEthical Standards 110 (APES 110) contains all the ethical standards and principles. Among allthese principles, the confidentiality principle is an important part. According to this principle, theauditors are not allowed to make disclosure of the financial information of the audit clientacquired while performing the audit operation to any third party. The provided situation indicatesthe delivery of audit working papers related to the current audit operation to PenshurstAccountants from Mortdale Accounting firm. While providing this audit information toPenshurst Accountants, Mortdale Accounting firm did not inform the audit client. Thus,according to APES 110, Mortdale Accounting has violated the audit ethical principle ofConfidentiality (Martinov-Bennie and Mladenovic 2015).
2AUDITING AND PROFESSIONAL PRACTICESAnswer to [b]From the provided situation, it can be seen that Jan Dungog makes a job application forone of the accountant’s position. What attracts the attention is the job application by Jan Dungogin a new company for a new position while presently working in a company. Apart from this, healso asked the local company not to inform his current employer about this application. The localorganization appointed him in their company by accepting his application and they has notinformed his current employer about this. According to APES 110 Section 110, these acts ofboth Jan Dungog and the local company lead to the breach of the audit ethical principle ofProfessional Appointment. According to this principle, at the time of accepting the engagementapplication of the auditors, business organizations are required to determine the existence of anykind of threat in the appointment process related to compliance. In this particular case, thebreaching of this act can be seen from the act of the company (Ottaway 2014). Answer to [c]The provided case indicates towards the existence of two separate situations. First,Wendal Sailor is an audit professional; second, he is the owner of a business of superannuationand insurance. In this context, it needs to be mentioned that there is not any breach of auditingethical standard due to the fairness of the fact that n auditor can have his/her own business. Theprovide case study indicates that Wendal Sailor uses to give advise related to other non-auditservices to his audit clients at the time of providing the audit services to them. According toSection 290 Provision of Non-assurance Services to Audit Clients principle of APES 110, theauditors are not supposed to provide any kind of non-audit services to their audit clients whileconducting the audit operations as it creates threat for auditors independence. Moreover, the
3AUDITING AND PROFESSIONAL PRACTICESaudit agreement does not include anything related to non-audit services due to its illegal naturefor the audit profession (Chapple et al. 2014). Answer to [d]According to the ethical principle of auditing, an active member of the audit team do nothave the right to possess any significant position in any other business corporations. From manyinstances all over the world, it can be observed that the audit members of the businessorganizations work as acting members as the board of directors of other companies. Ethicalprinciples of auditing consider this act as illegal as it can affect the independence of auditors.However, difference can be seen in the provided case situation. The provided situation showsthat Judith Durham works as an audit partner of a not-for-profit making organization. At thesame time, he posses the position of honorary member in the board of directors of a company. Itneeds to be mentioned that there is not any violation of audit ethical principles due to thehonorary position of him in the board that prohibits him in taking any management related role inthe company (William Jr, Glover and Prawitt 2016). Answer to [e]The provided case situation states that Ernie Dengate sells his accounting practices likebookkeeping, auditing, tax and others. In this situation, he has the permission of selling only thetax working papers, not others. In spite of this fact, he has sold all the other accounting papers toa new accountant Jago. In this context, APES 110, Section 250 Marketing ProfessionalServices has mentioned about the creation of the threat of auditor’s independence from thissituation. The above principle states that the auditors are required to obtain permission from
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