Auditing and Assurance Services: Violation of Ethical Principles

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
Question 1........................................................................................................................................2
Requirement A.............................................................................................................................2
Requirement B.............................................................................................................................2
Requirement C.............................................................................................................................3
Requirement D.............................................................................................................................4
Requirement E.............................................................................................................................5
Requirement F.............................................................................................................................5
Question 2........................................................................................................................................6
Situation 1....................................................................................................................................6
Situation 2....................................................................................................................................7
References........................................................................................................................................9

2AUDITING AND ASSURANCE SERVICES
Question 1
Requirement A
According to the given information, Peter Sung has been auditing the Musical Company
Pty Ltd. One can observed from the provided information that Dave Thompson who is the CEO
of the company says to Peter that he would receive 25% discount on the price of the tickets of
the next two concerts in the presence of the longstanding relation between them; and this whole
situation can contribute to the threat of audit principles. According to APES 110, Section 260,
Gifts and Hospitality, if an auditor accepts any kind of gift, hospitality and offer from the audit
client while providing the professional services, it can contribute towards the threat to non-
compliance with the required standards of audit ethics (apesb.org.au 2018). In the presence of
this threat to audit ethics, there is a possibility for the violation of the standard of APES 110,
Section 110, Integrity as it can question the ability of the auditor to be straightforward and
honest while providing the professionals services. Thus, in the presence of the above-discussed
audit guidelines, it can be concluded that there will be the violation of the standard of APES 110,
Section 110, Integrity due to the acceptance of the certain offer from the CEO of the audit client
company (Han Fan, Woodbine and Cheng 2013).
Requirement B
According to the given information, Jana Went has the responsibility to conduct the audit
of Gerroa Company for the first time; but the information indicates towards the fact that Jana has
conducted the audit of other companies in the same industry and for this reason, there is a high
potential for the violation of the general ethical principle of auditing. According to APES 110,
Section 140, Confidentiality, it is a prime responsibility on an auditor not to disclose the private

3AUDITING AND ASSURANCE SERVICES
business information of the audit client obtained while providing the assurance services to any
outside firm or perform without informing the client; and this regulation has connection with the
provided scenario of Jana (George, Jones and Harvey 2014). The scenario shows that Jana has
been the auditor of other companies in the same industry. At the time of conducting the audit of
those companies, Jana must have confronted with the confidential business information of those
companies. This whole aspect creates the possibility of using the obtained informant of those
other companies for the audit of Gerroa Company by Jana in the presence of some personal
interest in the audit client. For this reason, this aspect can lead to the violation of APES 110,
Section 140, Confidentiality principle of audit ethics (Martinov-Bennie and Mladenovic 2015).
Requirement C
As per the provided scenario of Jack Dack, in order to maintain the production process
along with the records of inventory, the responsibility is on Jack for the installation of a new
computer inventory system within the organization. Jack made the appointment of a computer
inventory consultant for this position due to the fact that he does not possess the required
expertise for the job. After that, Jack provides the approval to install the computer program
without the review of the work of the consultant as there was less time along with highly
technical nature of the job. The guiding principles of APES 110, Section 130, Professional
Competence and Due Care states that the auditor must possess the required knowledge and skill
for providing the professional services related to audit and assurance to the audit client (Van
Akkeren and Tarr 2014). At the same time, this regulation states that the auditors are needed to
act diligently by complying with the required technical standard. Thus, the presence of this
regulation puts the obligation on Jack hat he should have accepted the job in the presence of the
required knowledge and competency. Thus, this aspect leads to the violation of ethical principle