Auditing and Assurance Services: Analysis of a Case Study

Running head: AUDITING AND ASSURANCE SERVICES
Auditing and Assurance Services
Name of the Student
Name of the University
Author’s Note

1AUDITING AND ASSURANCE SERVICES
Table of Contents
Part 1................................................................................................................................................2
Part 2................................................................................................................................................3
References........................................................................................................................................6

2AUDITING AND ASSURANCE SERVICES
Part 1
The analysis of the provided case of Eric and Alan indicates towards the presence of
some major ethical, legal and other issues; and they are discussed below:
It is the requirement of the auditors to take into consideration the rules and regulations of
Auditing Standard ASA 220 Quality Control for an Audit of a Financial Report and Other
Historical Financial Information at the time to conduct the audit operations. According to ASA
220, Paragraph 11, Independence, it is needed for the auditors to maintain the aspect of the
independence of the auditors. For this reason, the auditors are needed to obtain relevant
information related to the breach of auditor’s independence, to involve in the evaluation of this
information for the identification of breaches and to take the required action for the elimination
of such threat (Ball, Tyler & Wells, 2015).
It can be seen from the provided case study that Alan and Eric has a long-standing
relationship as they have been friends for the years; and this aspect can lead to the violation of
auditor’s independence. According to APES 110, Paragraph 100.12 (d), there can be the
development of the threat of audit independence in the presence of any long or close relationship
of the auditor with the audit client due to the fact that the auditors can become too sympathetic to
their interests or to accept the work. Thus, in the sheds of this regulation of APES 110, it can be
said that there is the potential for the development of the issue of the threat of audit
independence by Alan due to his relationship with Eric (Sanderson, 2014).
It can also be observed from the provide scenario that Alan becomes aware about the fact
that Eric has used the amount of $12,345 of tax payment for paying the office bill his wife from
the notes of Jackie Yong and the audit trail; and this aspect caused the delay in the payment for