Auditing

Running head: AUDITING
Auditing
Name of the Student
Name of the University
Author’s Note

1AUDITING
Table of Contents
Question 1..................................................................................................................................2
Answer to a............................................................................................................................2
Answer to b............................................................................................................................2
Answer to c............................................................................................................................3
Answer to d............................................................................................................................3
Requirement e........................................................................................................................4
Requirement f.........................................................................................................................5
Question 2..................................................................................................................................5
Answer to a............................................................................................................................5
Answer to b............................................................................................................................6
Answer to c............................................................................................................................7
Answer to d............................................................................................................................7
References..................................................................................................................................9

2AUDITING
Question 1
Answer to a
It is observable from the provided information that the audit client, Lunar Ltd, receive
various services from Alfred Jarmon like bookkeeping, taxation return and management
services. It can also be seen that Computer Solutions has settled to provide Alfred Jarmon
with 10 percent commission in case he refers the products and services of their company to
the audit clients. It can be seen in APES 110, Section 240.5 Referral Fees and Commissions
that an auditor may accept commission from a third part for the sales of their products or
services (apesb.org.au 2019). Thus, self-interest threat will be created related to audit
objectivity and professional competence and due care of the auditor agrees in receiving these
kinds of recommendation fees from the third parties. It can be seen in this particular case that
it is likely to create self-interest threat as Alfred Jarmon receives 10 percent commission from
Computer Services. At the same time, it is likely that he may not act objectively in the
professional relationship in the presence of personal interest in the audit clients. Thus, Alfred
Jarmon violates the audit principle of Integrity as he can be held accountable as per APES
110, Section 240.5 (Ball, Tyler and Wells 2015).
Answer to b
It can be seen from the given scenario that Wrench and Company maintains the
information of their customers in the computer at their office. The company also allows their
customers to access this computer and assists in inserting the data. In this particular context,
Section 140 Confidentiality of APES 110 needs to be mentioned which state that auditors are
restricted from disclosing the important as well as confidential business information of their
client gained at the time of providing the professional services to any other parties in the
absence of proper approval (apesb.org.au 2019). Hence, it is the responsibility of the auditors

3AUDITING
to maintain confidentiality of their clients’ business information. Violation of this principle
can be seen in the provided case of Wrench and Company due to the fact that the company is
providing the access of the computer to other clients that has all the business information and
data about the audit client. Apart from this, the staffs responsible for this putting the data are
also become able in accessing the confidential business information of the clients. For this
reason, this action of Wrench and Company violates the Confidentiality principle of APES
110 (Chambers and Wakley 2016).
Answer to c
As per the situation, Katrina Ng is an audit manager of a not for profit organization
and also a member of the Board of Directors for another not for profit entity with honorary
position that does not involve her acting in the management capacity. In this context, the
ruling of APES 110, Section 290.146 Serving as a Director or Officer of an Audit Client
needs to be mentioned which states that major portion of audit independence threat will be
created when an audit manager of a firm operates as a director of another company or in the
Board of Directors of another company (apesb.org.au 2019). Thus, removal of that particular
audit members from the assurance team is the only safeguard that can be applied here. In this
case, Katrina Ng is an honorary member of the Board of Directors of a not for profit company
and this honorary position does not provide her any authority to play any role in the
company’s management. Hence, in the presence of these aspects, it can be concluded that the
actions of Katrina Ng do not involve the violation of any of the ethical principles of APES
110 (Vermeer, Raghunandan and Forgione 2013).
Answer to d
As per the provided case, Peter Beetson is a public accountant who delivers his clients
with various services like taxation services, management advisory services and bookkeeping
services along with conducting audit for them. In addition, he is the treasurer of the