Simpson Co. Auditing: Ethical, Quality, and Professional Issues Report

This report analyzes the auditing of Simpson Co., identifying ethical, quality, and professional issues. The report highlights ethical concerns such as a lack of integrity and confidentiality due to information disclosure and outsourcing practices. Quality issues include restrictions on audit fees and a lack of reasonable assurance in the audit report. Professional issues involve outsourcing work to offshore partners. The report recommends actions based on codes of ethics like ASIC 269, suggesting compliance and independent work for auditors. It emphasizes the importance of following guidelines such as ASIC INFO 196 and APES 110, to ensure audit quality and improve professional relationships, offering a comprehensive overview of the audit's shortcomings and proposed solutions, referencing relevant online resources.

Auditing

Table of Contents
MAIN BODY...................................................................................................................................1
1. Identification of the quality, ethical and professional issues determined from the auditing of
Simpson Co.................................................................................................................................1
2. Recommendation of the action must be taken for each issue with there justification...........1
REFERENCES................................................................................................................................3

MAIN BODY
1. Identification of the quality, ethical and professional issues determined from the auditing of
Simpson Co.
Ethical issues: lack of integrity and confidentiality by the professional of the committee.
The reason behind this issue is that being a partner of Zara, Russell revealed confidential
information related with Simpsons to Lester, auditing partner of Zara (ETHICS, 2018).
Moreover, the organisation is not keeping the integrity by outsourcing the work to the off shore
partners and that to the works assigned is not related is simple and does not involve any
complected work, this raise a question on the integrity and working level. The issue related with
code of ethics are determined as lack in following the different type of code of ethics relevant to
deliver good practice as concerned with the process of audit committee. It also includes that the
governing having a weak charter for the reference which is clearly setting out or mentioning
objective and responsibility. There is objectively lacking of encouragement in higher standards
of ethical behavior among all financial adviser including that of auditors.
For following the ethical and professional issue which are prevalent within company it is
also possible that auditor is complying with ethical behavior. This suggest lack of integrity with
their objective and that of company which are needed to be followed or maintained. This is
essential for the auditors to present a report that is reliable and do not miss any material factors in
the Audit of the financial and operational work of the firm.
Quality issue: Restriction on audit fees, lack of reasonable assurance that audit report
does not miss any material factor. Simpson has a weak level of integrity and professionalism in
their work as material and important factors that must be reviews in the report are left and report
presented lack certain significant factors related with business operations. The quality of the
report can not be assured by Senior auditor of Zara as there was a no independence given to
them as well as the fees of the auditors was also not raised and this is a constrain for the
effective performance and presentation of the audit report.
The audit committee is denying to increase the audit fees and also they have left
considerably material fact that needed to be reviewed in Audit (AUDIT QUALITY, 2018). With
raising organizational profits the fees of the auditors must b e increased but same is denied by
the internal audit committee this restrict the performance of the organisation Zara.
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Professional issue: At profession level issues has been identified as outscoring of the
work to oversees partners of Zara, which involves audit of the less complected work of
Simpsons. Non monitoring off international developed and engagement of Simpsons with other
partners of Zara. Professional issue of out sourcing of the work to off shore partner and minute of
the meeting carried out in Simpson are indicating the weak relation with audit firm and its
partners. The identification is done on the base that code of ethics and professional behavior
must be complied by the skilled and higher level staff of the organisation as well as the
committee members which can not be seen in the given case study.
2. Recommendation of the action must be taken for each issue with there justification
Cods of Ethics: ASIC 269
It is very much important that all companies are Following the code of ethics. ASIC 269
is very much essential as any person who is giving out the solution or personal advice to any
retail firm or customer should be complying with this code of ethics (Compiled APES 110 Code
of Ethics for Professional Accountants, 2018). This is highly recommended that auditor and
Russell who is the finance director is having wider knowledge and having compliment behavior
as well.
Quality of Audit: ASIC INFO 196:
This is recommenced to the audit committee and management of the Simpsons that they
as per the rules of the ASIC 196 the audit fees must not be restricted and the auditors must be
allowed to work interdependently (IMPROVING AUDIT QUALITY, 2018). More over, the
suggestion is given as per the norms of the accounting standards issues by the regulatory
authorities of the firm.
Professional level APES 110 Code of Ethics for Professional Accountants
This is recommended to internal audit committee of the Simpsons that, as per the ASIC
(THE ROLE OF DIRECTORS AND AUDIT COMMITTEES: ASIC GUIDANCE ON AUDIT
QUALITY, 2018). Furthermore, it is also advised to Zara that for better communications must be
set in order to set the higher integrity it the audit client and that must tell the management about
the rules and audit standardized that the organisation must follow in order to have healthier
professional relation with Zara as well the off shore partners of Zara.
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REFERENCES
Online
ETHICS.2018. [Online]. Available through :<https://www.cpaaustralia.com.au/professional-
resources/ethics>.
Compiled APES 110 Code of Ethics for Professional Accountants.2018. [Online]. Available
throug
:<https://www.apesb.org.au/uploads/standards/apesb_standards/20092017153656_Compi
led_APES_110_Sept17.pdf>.
IMPROVING AUDIT QUALITY. 2018. [Online]. Available through
:<https://www.cpaaustralia.com.au/podcast/16>.
THE ROLE OF DIRECTORS AND AUDIT COMMITTEES: ASIC GUIDANCE ON AUDIT
QUALITY. 2018. [Online]. Available through :<https://www.nfplawyers.com.au/the-role-
of-directors-and-audit-committees-asic-guidance-on-audit-quality/>.
AUDIT QUALITY. 2018. [Online]. Available through
:<https://www.accaglobal.com/in/en/student/exam-support-resources/professional-
exams-study-resources/p7/technical-articles/audit-quailty.html>
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