Analysis of Ethical and Professional Issues in Audit and Assurance

This report provides an analysis of ethical and professional issues within the context of audit and assurance, focusing on three case studies: BlueSky Ltd, BlackStone Ltd, and Key Solution Pharmacy Ltd. The report identifies ethical concerns such as the impact of personal relationships on audit decisions, potential conflicts of interest related to tax law breaches, and the implications of fee reductions on audit firms. It offers specific recommendations for each case, including advice on handling late payments, providing unbiased information regarding tax breaches, and negotiating fee arrangements. The conclusion emphasizes the importance of audit and assurance in maintaining business sustainability and the need for proactive measures to address ethical and professional challenges. The report references academic journals and books to support its findings and recommendations.

Audit and Assurance

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Identification and discussion of the ethical and other professional issues found in the three
cases.............................................................................................................................................1
Recommendation regarding the actions that should be taken in relation to each of the issues
identified in the cases...................................................................................................................2
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................3

INTRODUCTION
Audit could be described as a financial activity which is required to be focused by all the
businesses so that actual position and performance of business could be evaluated. In order to
analyse that the business is able to maintain its sustainability it is very important for the
businesses to make sure that all the final accounts are audited every year to generate assurance
(Kend and Nguyen, 2020). Present discussion is based upon analysis of the ethical and other
professional considerations for Burwood Assurance Partners that should be focused by the
businesses to maintain position of business. Apart from this, recommendations along with the
actions that should be taken by the enterprise in each situation are also covered in the discussion.
MAIN BODY
Identification and discussion of the ethical and other professional issues found in the three cases
Case 1: By analysing the case 1 which is related to BlueSky Ltd following ethical and
other professional issues are analysed:
 As Peter who is the audit partner of the company has good relations with Jack CEO of
BlueSky agreed to the optimistic assessment of Jack but it was not ethical because the
agreement was based upon personal relations. In business the individuals should ignore
personal relations as it may lead the business towards failure.
 Another ethical concern which was required to be focused by the organisation was related
late payment of BlueSky. If the enterprise will pay the amount in 2021 than it may leave
negative impacts upon profitability of business which may affect its market image.
Case 2: With the help of case of BlackStone Ltd different ethical and professional issues
are identified which are discussed below:
 Australian Tax office has determined that the organisation has breached the taxation
related laws and asked BAP to provide assistance to look at the tax position and on the
other hand, BlackStone asked to work as non-executive partners. In this situation the
enterprise has ethical issues because if the organisation will not work proper for ATO
then it may leave negative impact upon business. On the other hand, this is a great
opportunity for the audit committee to become a part of a corporation as non-executive
director (Knechel and Salterio, 2016). It is very important for the business to find best
option from both the alternatives.
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 If the audit partner will be working as non-executive director, then it may affect the
accuracy of the results that will be generated by the organisation as the non-executive
director will provide judgement in favour of the company.
Case 3: This case is related to key Solution Pharmacy Ltd. which is a beauty and health
care product provider. The main ethical issues related to it are discussed below:
 One of the major issue which is faced by BAP in context of this client is related to the
decrement in fees of it by 30%. If the company will get agree to this term, then rest of the
clients may ask for the same benefit which may affect profitability of the enterprise.
 Another ethical issue which is analysed form the case is letting go KSP which asked for
30% decrement in the fees. It is contributing almost 12% in the income of the company if
this client will contact another auditor then it will affect the organisation’s financial
strength (Louwers, 2018).
Recommendation regarding the actions that should be taken in relation to each of the issues
identified in the cases
 It is recommended to BAP that in case of Bluesky it should not allow the late payment to
the company because it may affect liquidity of the organisation.
 The action which should be taken by BAP in case of BlackStone is providing right and
unbiased details regarding the breach of taxation rules because wrong results may result
in legal actions against the BAP.
 The audit committee of BAP is recommended to talk with KSP and try to convenience it
remain part of the enterprise and ignore the rebate (Ruiz-Barbadillo and Martínez-
Ferrero, 2020).
CONCLUSION
From the above project report, it has been concluded that for all the entities it is very
important to make sure that audit and assurance are focused by them as it can help to maintain
business’s sustainability. In case of ethical and professional issues the entities should take
effective actions to resolve the issues.
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REFERENCES
Books and Journals:
Kend, M. and Nguyen, L. A., 2020. Big Data Analytics and Other Emerging Technologies: The
Impact on the Australian Audit and Assurance Profession. Australian Accounting
Review.
Knechel, W. R. and Salterio, S. E., 2016. Auditing: Assurance and risk. Taylor & Francis.
Louwers, T. J. and et. al., 2018. Auditing & assurance services. McGraw-Hill Education.
Ruiz-Barbadillo, E. and Martínez-Ferrero, J., 2020. Empirical analysis of the effect of the joint
provision of audit and sustainability assurance services on assurance quality. Journal of
Cleaner Production, p.121943.
(Ruiz-Barbadillo and Martínez-Ferrero, 2020)
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