Ethical principal for the members under different circumstanced is provided in APES 110 – Code of Ethics for Professional Accountants. The code includes 3 parts – recognizing threat, assessing the significance of recognised threat and (iii) applying safeguards for the threats, wherever needed (Accounting Professional & Ethical Standards Board 2019).
(a)
As per the requirement of APES 110 the accounting professional is not allowed to promote any product while providing audit service. In the given scenario, the professional accountant provides various services like preparation of tax returns, book keepings and management services. During the period when it was providing the services advising its client to purchase the computer from Computer Service Ltd that will offer 10% commission if the accountant’s referral helps it to sell the computer. Such referral commission or fee will create self –interest threat to objectivity as well as professional competence and due care of the professional (Martinov-Bennie and Mladenovic 2015).
(b)
The auditor is not allowed to provide any suggestion for financial statement preparation ant not incorporating their judgements that may have significance influence on the preparation of financial statement. However, the auditor may assist the client in various matters like converting the reporting framework to any other framework or provide assistance for complying with accounting policies and these will not breach the ethical principal of the auditor. Further, allowing the clients to use its computer where client record is maintained will not breach the ethical principal unless the information is disclosed to the client (Aasb.gov.au 2017).
(c)
Members involved in public practice must ensure that while providing the services to client it does not create any type of threat against the principal of fundamental objectivity. For assuring this the auditor shall not establish any relationship with the client, its business, employees or executives. In the given scenario, Katrina Ng, manager of the audit firm for non profit entity. In addition to being the manager of audit firm, she also holds the honorary position of board of directors of the client company. All Australian members shall be complied with APES 110 even when the service provided is in honorary capacity. Otherwise it will generate self-interest threat that will have adverse impact on the independence of the auditor. Hence, immediately she shall resign from the post of board of directors or shall not express any opinion on the audit procedure of not for profit entity. If she does not imply any of these following, it will violate the ethical principal of APES 110.
(d)
The professional member as per the requirements of APES 110 shall not be involved in providing any other services except the professional services involving accounting, tax and audit. Here in the given situation, apart from providing tax services, management services and bookkeeping services is the treasures of Northbridge Joggers Club that is a not for profit club that is run by him on weekends. Acting as the treasurer is not the permitted profession as per the allowable profession (Amin, Krishnan and Yang 2014). Hence, acting as the treasurer will violate the professional competence and due care as per the requirement of APES 110.
(e)
While the member from public practice solicits the new work through the advertisement in the newspaper or any other forms of marketing, it may create threat to the compliance of fundamental principles. It will create self-interest threat if services, products or achievements are advertised in a manner that is inconsistent with principle. Further, the member shall not make any exaggerated claims for the offered services, experience gained or qualifications possessed. They shall not further disparage the references or unsubstantiated comparisons to work on other (George, Jones and Harvey 2014). In the given circumstances The Berowra Accountants advertised in local newspaper with bright colourful page picture of staff and provided that they are the top accountants in district and they are able to get highest deductions for tax in all the accounting firms. Advertising about the firma and its staff in this way will violate the ethical principal code mentioned in APES 110.
Self interest threat will be created if the fees due from the client are unpaid for long time, particularly if the considerable part is not paid before issuance of the report of the following year. The client is required to make the payment of such fees before issuance of audit report. However, if the fees remain unpaid after issuance of the report, significance and existence of the threat must be analysed and the safeguards shall be applied when it is required to remove the threat or reduce the threat level to the acceptable level. Further, the auditor shall whether overdue fees may be regarded as a loan to client or not. Further, it shall be assessed that owing to the significance of overdue fees, whether it is suitable for the audit firm to be re-appointed or to continue the audit engagement. In the given scenario, audit fees for the previous year’s audit closed on 30th June 2017 have not yet been paid by Olive Ltd to the auditor David Chatham. Further, the auditor started the audit for the following year that is for the year closed on 30th June 2018. In such circumstance, if the auditor continues auditing for Olive Ltd it will create self-interest threat (Christensen, Glover and Wolfe 2014).
Different kinds of audit opinion those can be expressed on financial statement of the client by the auditors are as follows –
(a)
Auditor was not able to get the confirmation from 4 of the major customers included in sample. However, nothing is mentioned here regarding the sample size that is whether 4 clients is major component or minor component. Further, balances of these 4 accounts have been confirmed through other procedures. Hence, in this scenario the auditor will express unqualified opinion.
In the given scenario the auditors were restricted to verify the property, plant and equipment that form a material part of asset making it 25% of the total asset. Hence, the auditor shall express disclaimer of opinion as restriction on verification of material component of asset will restrict the auditor to express definite opinion (Sultana et al. 2015).
An important disclosure associated with contingent liability is removed from the disclosures. However, this may have material impact on entity’s financial report if the contingent liability is converted into actual liability. However, as this item is independent and will not have any other impact on the financial statement of the entity, the auditor will provide disclaimer of opinion.
Under the given scenario the auditor will issue qualified opinion as the entity used the discarded accounting standards for preparing its financial reports that will lead to misstatement in various contexts. Further, it did not make any amendments to the financial reports through the misstatement extent was measurable (Chen and Zhang 2018).
References
Aasb.gov.au. 2017. Australian Accounting Standards Board (AASB) – Home. [online] Available at: https://www.aasb.gov.au/ [Accessed 26 Jan. 2019].
Accounting Professional & Ethical Standards Board, 2018. Code of Ethics for Professional Accountants. [ebook] Australia: Accounting Professional & Ethical Standards Board. Available at: https://www.apesb.org.au/uploads/standards/superseded_pronouncements/21092016145901_APES_110.pdf [Accessed 26 Jan. 2019].
Amin, K., Krishnan, J. and Yang, J.S., 2014. Going concern opinion and cost of equity. Auditing: A Journal of Practice & Theory, 33(4), pp.1-39.
Chen, B. and Zhang, X., 2018. If Leases are not Capitalized: The Effects of a Qualified Audit Opinion on Investors’ Judgments and Decisions. Journal of Accounting and Finance, 18(2), pp.200-212.
Christensen, B.E., Glover, S.M. and Wolfe, C.J., 2014. Do critical audit matter paragraphs in the audit report change nonprofessional investors’ decision to invest?. Auditing: A Journal of Practice & Theory, 33(4), pp.71-93.
George, G., Jones, A. and Harvey, J., 2014. Analysis of the language used within codes of ethical conduct. Journal of Academic and Business Ethics, 8, p.1.
Martinov-Bennie, N. and Mladenovic, R., 2015. Investigation of the impact of an ethical framework and an integrated ethics education on accounting students’ ethical sensitivity and judgment. Journal of Business Ethics, 127(1), pp.189-203.
Sultana, N., Singh, H., der Zahn, V. and Mitchell, J.L., 2015. Audit committee characteristics and audit report lag. International Journal of Auditing, 19(2), pp.72-87.
Tahinakis, P. and Samarinas, M., 2016. The incremental information content of audit opinion. Journal of Applied Accounting Research, 17(2), pp.139-169.
We provide professional writing services to help you score straight A’s by submitting custom written assignments that mirror your guidelines.
Get result-oriented writing and never worry about grades anymore. We follow the highest quality standards to make sure that you get perfect assignments.
Our writers have experience in dealing with papers of every educational level. You can surely rely on the expertise of our qualified professionals.
Your deadline is our threshold for success and we take it very seriously. We make sure you receive your papers before your predefined time.
Someone from our customer support team is always here to respond to your questions. So, hit us up if you have got any ambiguity or concern.
Sit back and relax while we help you out with writing your papers. We have an ultimate policy for keeping your personal and order-related details a secret.
We assure you that your document will be thoroughly checked for plagiarism and grammatical errors as we use highly authentic and licit sources.
Still reluctant about placing an order? Our 100% Moneyback Guarantee backs you up on rare occasions where you aren’t satisfied with the writing.
You don’t have to wait for an update for hours; you can track the progress of your order any time you want. We share the status after each step.
Although you can leverage our expertise for any writing task, we have a knack for creating flawless papers for the following document types.
Although you can leverage our expertise for any writing task, we have a knack for creating flawless papers for the following document types.
From brainstorming your paper's outline to perfecting its grammar, we perform every step carefully to make your paper worthy of A grade.
Hire your preferred writer anytime. Simply specify if you want your preferred expert to write your paper and we’ll make that happen.
Get an elaborate and authentic grammar check report with your work to have the grammar goodness sealed in your document.
You can purchase this feature if you want our writers to sum up your paper in the form of a concise and well-articulated summary.
You don’t have to worry about plagiarism anymore. Get a plagiarism report to certify the uniqueness of your work.
Join us for the best experience while seeking writing assistance in your college life. A good grade is all you need to boost up your academic excellence and we are all about it.
We create perfect papers according to the guidelines.
We seamlessly edit out errors from your papers.
We thoroughly read your final draft to identify errors.
Work with ultimate peace of mind because we ensure that your academic work is our responsibility and your grades are a top concern for us!
Dedication. Quality. Commitment. Punctuality
Here is what we have achieved so far. These numbers are evidence that we go the extra mile to make your college journey successful.
We have the most intuitive and minimalistic process so that you can easily place an order. Just follow a few steps to unlock success.
We understand your guidelines first before delivering any writing service. You can discuss your writing needs and we will have them evaluated by our dedicated team.
We write your papers in a standardized way. We complete your work in such a way that it turns out to be a perfect description of your guidelines.
We promise you excellent grades and academic excellence that you always longed for. Our writers stay in touch with you via email.