This article discusses the ethical principles that auditors should follow while conducting audit services. It covers scenarios where conflicts of interest may arise and how to handle them.
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AUDITING AND ASSURANCE AUDITING ETHICAL PRINCIPLES Course: Professor’s Name Institution City Date
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AUDITING AND ASSURANCE According to Accounting Professional and Ethical Standards (2013.Pg.5), APECS are guidelines that require all certified public accountants and auditor act in a responsible, objective, professional competency, integrity, due diligence and lastly the act of minding the public interest of the concern parties in their needs. The items in question a, b and c revolves around the above- highlighted traits. (a)In this first scenario Peter Sung a senior auditor is offered a ticket at a discount of 25% by the same company that he provides audit services. The fact that Peter is offered the ticket at a discount by his client, a principle of conflict of interest as well as self-interest arises. However, it depends on the way the following principle of self-conflict interest affects the objectivity aspect of conducting the audit service. Ideally, if this offer discount and the pre-booking consideration is given to Peter just as any other regular customer of The Musical Company Ltd is presented in a nutshell there exist no violation of the objectivity and integrity trait (Martinov-Bennie, Cohen and Simnett,2011.Pg.660.)However, if it is only done to Peter because of their long-term relationship and not by the policy of the company then there is the violation of objectivity and integrity of Peter audit service will be compromised due to self-conflict interest. (b)The fact that Jane Went is an auditor of Gerroa Company and seems to have any stake in this company there is no violation of any ethical principles, just because what is doing is just rendering his professional competency skills he learned in his 3years audit service he offered in a similar field to this one of Gerroa Company. In any case, there are no signs of Jana showing to compromise the operations of the new client Gerroa hence no violation of any ethical principle is witnessed (Davies and Aston, 2017.Pg.7.)
AUDITING AND ASSURANCE (c)Daka Jack is a chartered accountant and not a system installation expert thus the fact that he knows he is not an expert he would inform the client to avoid compromising his professional competency and more so objectivity threat on the system installation since his referral to the system expert who is acting on his behalf and not on himself(system expert) creates an aspect of conflict of interest (Kaidonis,2008.Pg.10)whereby in case the client does not have time to check the status of the job done he may opt to approve it or even hide anything that may deny him the referral or commission fee he will be getting hence compromising his integrity and due diligence care of his work.
AUDITING AND ASSURANCE References; Accounting Professional and Ethical Standards Board (APESB), 2013. APES 110 Code of Ethics for Professional Accountants. Davies, M. and Aston, J., 2017.Auditing fundamentals. Pearson Higher Ed Kaidonis, M., 2008. The Accounting Profession: Serving the public interest or capital interest?.Australasian Accounting, Business and Finance Journal,2(4), p.1. Martinov-Bennie, N., Cohen, J. and Simnett, R., 2011. Impact of the CFO's affiliation on auditor independence.Managerial Auditing Journal,26(8), pp.656-671.