Analyzing Ethical Principles in Auditing Practices

The assignment critically evaluates the conduct of Berowra Accountants, Jamie Harvey's appointment, Pymble Accountants' dependency on audit opinion for payment, and Chadwick Chartered Accountants' review process. It assesses each situation against the APES 110 Code of Ethics for Professional Accountants, identifying potential ethical violations in professional competence and due care, objectivity, and confidentiality principles. The analysis highlights how auditors must maintain independence, avoid conflicts of interest, and uphold confidentiality to ensure integrity in financial reporting.

Running head: AUDITING AND ASSURANCE
Auditing and Assurance
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Answer to Question [a]....................................................................................................................1
Answer to Question [b]....................................................................................................................1
Answer to Question [c]....................................................................................................................2
Answer to Question [d]....................................................................................................................3
References........................................................................................................................................4

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Answer to Question [a]
The provided case study states that Berowra Accountants are assuring that there will be
guaranteed tax refund for the business of their clients and the company is stating this with the
help of a special advertisement. Tax refund is the difference between tax owed and tax paid and
it is completely related to taxation. Companies can avail the opportunity of tax refund in case
they pay more amount of tax than their tax liabilities (Galit and Sorbe, Metabank 2012). Income
of the organization, profit and tax expenses are the main determinants of tax refund for the
companies and thus, an auditors cannot assure a company for tax refund. It is the responsibility
of the auditors to inspect the company’s financial statements for finding material misstatements
and to make the compliance check. To provide these types of assurance shows lack of
professionalism of the auditors. Thus, according to APES 110 Code of Ethics for Professional
Accountants, Section 130, by providing this type of advertisement, Berowra Accountants has
violated the ethical principle of Professional Competence and Due care (Han Fan, Woodbine
and Cheng 2013).
Answer to Question [b]
The provided case study indicates that Jamie Harvey is the auditor is an auditor of a
chartered accountant firm and he has been requested to hold the position of the treasurer of a
local athletic club. Information shows that Jamie Harvey conducts the audit of large public firms.
The nature of athletic clubs is not-for-profit societies. APES 110 Professional Appointment,
Section 210 states that it is the duty of the auditors to determine the fact that where their new
appointment as auditor has negative impact on the fundamental ethical principles of auditing
(Wijesinghe 2015). For this particular situation, Jamie Harvey will not violate any fundamental

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ethical principle of auditing by accepting the offer to be the treasurer of the local athletic club as
Jamie Harvey only conducts the audit operation of large public companies and to be the treasurer
of the local athletic club does not pose any threat to his auditing works. Moreover, there is not
any breach of any fundamental auditing principles due to the appointment in any not-for-profit
organization. All these aspects make Jamie Harvey safe from violating any auditing ethical
principle.
Answer to Question [c]
According to the provided situation, the payment of the auditor, Pymble Accountants
largely depends on the suitable audit opinion Monlec Ltd, the audit client. This situation
indicated towards the demand of the audit client to get favorable audit report from the auditor.
However, it is not the duty of the auditor to provide favorable audit opinion as they are the
representatives of shareholders, investors and creditors. APES 110 Principle of Objectivity,
Section 120 indicates that under any kind of influence, conflict of interest, biasness or other, the
auditors must not compromise their professional audit judgment (Marley and Pedersen 2015). It
perfectly indicates that the auditors should not be affected with any kind of undue influence from
the audit client. In this particular situation, the auditor will violate the auditing ethical principle
of objectivity in case they issues favorable audit opinion for Monlec Ltd. On the contrary, in case
the auditor does not come under the pressure of Monlec Ltd and issues fair audit opinion, there
will not be any violation of audit principles.
Answer to Question [d]
From the provided case study, it can be observed that Chadwick Chartered Accountants
receives all the papers and reports related to audit of Motoring Services from Winton

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Accountants. It is the responsibility of Chadwick Chartered Accountants to review the quality of
audit of Winton Accountants. As a part of this job, it is required for Chadwick Chartered
Accountants to conduct a number of analytical processes and tests for checking the audit quality
of the financial statements Winton Accountants. According to APES 110 Principles of
Confidentiality, Section 140, it is the professional obligation of the auditors to maintain the
confidentiality of data and information of the audit client acquired at the time of conducting the
audit operations (Blackburn, Carey and Tanewski 2014). As a result of this auditing principle,
the auditors do not have the right to disclose the auditing information to any third party. The
opposite of this instruction can be observed in this case as Winton Accountants have delivered
all audit papers and reports to Chadwick Chartered Accountants that contain confidential
financial information of the audit client. Thus, it is clear that this particular action of Winton
Accountants has violated the confidentiality principle of audit ethics.

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References
Blackburn, R., Carey, P. and Tanewski, G., 2014. Business advice by accountants to SMEs:
relationship and trust.
Galit, S.H. and Sorbe, T., Metabank, 2012. Computerized extension of credit to existing demand
deposit accounts, prepaid cards and lines of credit based on expected tax refund proceeds,
associated systems and computer program products. U.S. Patent 8,090,649.
Han Fan, Y., Woodbine, G. and Cheng, W., 2013. A study of Australian and Chinese
accountants’ attitudes towards independence issues and the impact on ethical judgements. Asian
Review of Accounting, 21(3), pp.205-222.
Marley, S. and Pedersen, J., 2015. Accounting for Business: An Introduction. Pearson Higher
Education AU.
Wijesinghe, M.C., 2015. Technical Update 2013/2.