(PDF) Conflict of Interest

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Added on 2021-02-19

(PDF) Conflict of Interest

Added on 2021-02-19

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AUDITING

TABLE OF CONTENTSQUESTION 1...................................................................................................................................1A) Explanation on conflict of interest of Directors.....................................................................1B ) Auditing standards specifically applicable to public company..............................................1QUESTION 2...................................................................................................................................2A) Specify....................................................................................................................................2B) Auditor guilty of fraud............................................................................................................3REFERENCES................................................................................................................................4

QUESTION 1A) Explanation on conflict of interest of DirectorsI) Purpose behind reporting of conflict of interest by directorsConflict of interest are to be reported by the directors of ITC to the company in boardmeeting and general meetings. Company comprises of several interest groups that can createvarious dimensions in conflict of interests. Reporting of conflict of interest is mandatory under the provisions of laws. Sec 191 ofCorporations Act 2001 requires directors of company to report to board of directors materialpersonal interest in any contract related to affairs of company (Conflict of Interest. 2019). Directors have the responsibility of protecting interest of company complying the principle ofgood faith. Directors having personal interest have restrictions like prohibition from participatingin meeting in which contract related to personal interest will be discussed. Entering companyinto contract for their personal benefit or of their relatives. Director as per the legislative regulation will have to face penal provisions on failure ofreporting personal interest to the directors in board meeting. Reporting of personal interest isessential so that company is in knowledge of the contract and can ensure that director is notinfluencing the decision for the personal interest.II) Nature of conflict of interestConflict of interest refers to situation where professional judgement related to primaryinterest of company tends or appear of having unduly influenced because of secondary interest ofdirectors. Common conflict of interests that arises in company areImproper conduct & activities – Directors are not required to engage in activities or conduct thatare inconsistent with interest of company or disrupts the affairs of company.Compensation from other sources – Directors are not supposed to accept compensation from anyother source for services performed for company other than company.Gifts – Gifts of any kind that may influence the decision of directors against the interest ofcompany are not to be accepted by them.B ) Auditing standards specifically applicable to public company.I)Purpose of auditing standardsASA 240- Responsibility of Auditor relating to fraud in an audit of Financial report. Thestandard guide auditor about reporting of fraud identified during conducting audit procedures.1

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(PDF) Conflict of Interest