Principle of Auditing

Running head: Principle of Auditing
Principle of Auditing
Name of the Student
Name of the University
Author Note

1
Principle of Auditing
Table of Contents
Question No 1............................................................................................................................2
1A...........................................................................................................................................2
1B...........................................................................................................................................2
Question No 2............................................................................................................................4
Question No 3............................................................................................................................5
Question No 4............................................................................................................................7
Question No 5............................................................................................................................8
5A...........................................................................................................................................8
5B...........................................................................................................................................9
Reference..................................................................................................................................10

2
Principle of Auditing
Question No 1
1A
Actual Independence to the auditor means that the auditor will not do any kind audit
service of the company in which any of the family member of the auditor have any kind of
interest as not the auditor but also if the auditor family member have any interest than
independent of the auditor will not be valid in the company (De Simone, Ege & Stomberg
2014). As the audit is been done by the auditor to say whether the financial statement are
showing true and fair view or not so if the auditor have any interest in the company than it
will not able to give an independent audit report to the company. So to keep the opinion fair
the auditor should not perform any audit in similar nature of the company.
Perceived Independence in regards with the auditor should have a professional
relation with the company as it should work as a professional and should decrease the gap of
it with the management of the company so that it can able to give an independent opinion
upon the financial statement of the company (DeFond & Zhang 2014). As if the auditor does
not maintain a professional behaviour with the management than it may happen that the
company may influence the auditor to give decision in favour of them and as a result the
auditor have to give a false opinion about the financial statement and its can be a fraud in
regards with the financial user of the company. So this the reason the auditor should have a
professional gap with the management.
1B
1. The auditor have broken the confidentiality principle which been laid down in
the professional standard as the auditor have no right to use any of the
information of one client to another (Donelson, Ege & McInnis 2016). As the
company information is very secret so the auditor should not use the

3
Principle of Auditing
information in related to the company to different company. So the auditor
have breach the confidentiality clause which is there in its profession and also
it has used information in regards of the different company (Furnham &
Gunter 2015). It can be stop the breach of the clause as if it had asked the
company about the matter as it can have ask the company that it require some
of the detail in regards with the audit of different company and with the
permission of them it can have use the information in his upcoming audit
process this would have save him in regards of the breach and also doing of an
illegal act in regards with the professional standard.
2. An auditor should not provide any additional service to the client as it should
not provide any additional services to the client it should only provide services
related the professional that it should only do the audit of the company
(Griffiths 2016). To maintain a professional auditor should only perform its
duties and should not provide any additional service which can directly or
indirectly can affect the opinion of the auditor. As in the case the auditor
become a part time company secretary of the company so it have to deal with
the management as a result the professional gap of the auditor will not be there
so it will directly affect the opinion of the auditor in regards with financial
reporting of the company. So the auditor should strictly avoid giving the
service to the company as a company secretary but it can able to search a good
employee for the company who can provides such services but the auditor
should not provide such services to the client company.
3. An auditor cannot take any family member of the client in its auditing service
as it can directly affect the service quality and which can result in a wrong
opinion of the financial statements (Hall 2015). In the given case as the audit