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Auditing Theory & Practice Assignment

   

Added on  2020-05-16

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Running head: AUDITING THEORY AND PRACTICEAUDITING THEORY AND PRACTICEName of Student-Name of University-Author note-Answer 1a.According to the provisions of APES 110 Codes of Ethics for Professional Accountantsstates, that confidentiality of any information must be maintained by an auditor, to whichhe had access to during the course of audit Section- 140.1 of the APES 110 states that no
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1AUDITING THEORY AND PRACTICEdisclosure should be made by any auditor the course of the audit. Important audit findingsand information are generally noted down by the auditors in working paper. Section-140.6 of the APES 110 states that even after the auditor’s terms of engagement with theparticular client is over, he cannot disclose any information of his client. Moreover, anauditor should not disclose any information related to previous clients.b.Nothing has been stated particularly under the provisions of the APES regarding thisquestion in the given case. However, a background check must be done by a firm in caseof any new employee it is employing. Moreover, professional competence must beensured regarding the capability of the person, performing the job and also the requiredskill and knowledge of the person in the particular field.In this case, therefore, there has been no breach of ethical standards in accordancewith the provisions of the APES 110, as the APES 110 does not have any such issue. c.The principles of objective, according to section 120.1 of APES, statesthat an auditor must not compromise his judgment or act in a biased way, underinfluences of others and must form independent judgments in making financialstatements for the clients. Section- 220.1 of the APES states that a it may lead to conflictwhere the same business is engaged by the auditor and is in competition with a publicfirm, which not only threatens the principle of confidentiality but also the objectivity. d.Section- 290 of the APES states that an auditor has to be free from the client and as perthis section independence can be classified into independent mind and freeness ofappearance. This concept is crucial to the principles of objectivity and integrity for theaudit quality. It is also stated clearly through Section-290 that when an auditor takes up
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2AUDITING THEORY AND PRACTICEor already has a position in the company of the client or has any financial interest withinthe company, it will be treated a threat to independency. Therefore, as the auditor holds a position of the director in the given scenario,there is a clear breach of ethical standards, as the auditor holds a financial interest in thecompany.e.In the given case, Ernie Dengate sold her audit working papers, bookkeeping, and tax toanother person, who had bought the business. According to the rules of APES 110,confidentiality must be maintained by an auditor, about the information, which he hadaccess to, during the course of audit. Moreover, section-140.1 states that suchinformation must be disclosed to any outside business or third party, by the auditor andhe shall not provide the anyone’s working paper, even after his term with client inrelation to engagement has ended. He shall preserve such papers for the particular time asmandated through the regulations. f.Any person should not engage in any occupation or activity, which might harm theobjectivity, integrity and good reputation of the auditing profession, as per Section-200.2of the APES. In the given scenario, Fred Nerk, provides tax services, audit services andadvisory services to its clients. Sometimes, all these three activities are done by him forthe same client, which is a violation of the ethical standards. It is so, because it will affectthe objectivity, integrity and even independence of the auditor (Knechel et al. 2012).g.In the given scenario, the All good Chartered Accountancy firm maintained allinformation of his client Branch Company in computers, which is permitted by the auditregulations.
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