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Nathan Zhang ACC305 INDIVIDUAL ASSIGNMENT ACC305 Individual ASSIGNMENT Due 10/08/2018 before 5pm Worth 40% This assignment is comprised of different questions so it is necessary to answer each...

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Nathan Zhang
ACC305 INDIVIDUAL ASSIGNMENT
ACC305 Individual ASSIGNMENT
Due 10/08/2018 before 5pm Worth 40%
This assignment is comprised of different questions so it is necessary to answer each question separately.
NOTE: THIS IS A individual ASSIGNMENT.
QUESTION 1(24 marks)
The following situations involve potential violation of the general ethical principles as outlined in APES 110 .You are asked to advise whether they involve a violation or not of the ethical principles
and if there is a violation explain which ethical principle has been violated and the reason(s)why it is or isn’t a violation .
a) Jenny Wang is the Senior Auditor on the audit of Panania Cars Pty Ltd , a large car dealership,a which sells new and used cars .The Sales Manager advises Jenny Wang that there is a sale to long established customers of the car dealership and since she has audited the company for the past six years she can purchase the new cars at a twenty percent discount on the discounted sales price.
b)Katrina Wearne is the auditor on the audit of Lancom Cosmetics .Katrina is auditing the company during November and December 2018 and has been given a Christmas gift of $350 cosmetics from the company .
c)A client requests the assistance of D.Ma
on ,a chartered accountant ,in the installation of a computer system for maintaining production and inventory records .As Ma
on has no experience in this type of work he engages a computer consultant who he has confidence in to ca
y out the review.Due to the highly technical nature of the work Ma
on is not able to review the computer consultant’s work and once the client has agreed Ma
on gives the go ahead for the installation of the computer system.
d)Six small chartered accounting firms have been taking part in a quality assurance working paper review program.Under this review each firm reviews the working papers of another firm and the reviewer discusses the strengths and weaknesses of the audit with the auditor from the other firm.
e)Bill Holland , a chartered accountant ,sets up a casualty and fire insurance agency to complement
his auditing and tax services .He doesn’t use his own name on anything relating to insurance agency
and has a highly competent manager,Simone Taylor, who runs it .Holland often requests that Taylor review the adequacy of the client’s insurance with management if the client seems underinsured .
f)Emma Lawrence , a public accountant in a small country town,provides tax services,management advisory services ,bookkeeping services and conducts audits for the same client .Since the firm is small the same person often ca
ies out all the services.
QUESTION XXXXXXXXXXmarks)
The following situations refers to threats to the Auditor’s independence.You are asked to state what
the different threats to the Auditor’s independence are and explain how these threats impact on the Auditor’s independence and any other implications for yourself and your firm.

SITUATION 1
Enid Blyton has been working as an auditor for the Anthony Don Chartered Accounting firm for the past four years and has just started an audit on the Green Thumbs environmental company, a small newly listed public company which has just listed as a public company one month ago.The
Green Thumbs environmental company has just started using a new contractor to dispose of its toxic waste .You know that this new contractor has won tenders in the past and there have been several unfavourable articles about this contractor in the local press.
Your Audit Manager ,Peter Don , has stated that it is your responsibility just to provide an opinion
on the financial statements with the emphasis being on providing an opinion on whether the financial statements are true and fair and whether there are any material misstatements.
SITUATION 2
Jean Douglas has just started to do the audit on the latest financial statements and has just made the following notes from your opening interview with John Dooley,CEO of Dooleys.
John has apologised for not making the final payment of 30% of the prior years audit fee but has explained that he will ensure the cheque is written once he is happy with the progress on the cu
ent audit. At this stage John Dooley has advised that the firm will be able to start deliberations
about the selection of Auditor for the following year.The Dooleys audit comprises forty percent of the annual audit fees for the firm .
John has advised that they will be providing a free trip to Europe for an Auditor from the Audit firm and his partner once the audit is successfully completed.
Jean is concerned with several aspects of the cu
ent audit as Dooleys do not appear to be following the accounting standards in their valuation of inventory as they are not taking into account the reductions in fair value of inventory and the impact on the financial statements is material.
Requirement:
Font size is 12, word limit is from XXXXXXXXXX.
Harvard reference system
Due time is at 7/08/2018 before 5pm , no extension will be given. One day late, 10% deduction on your assignment until zero.
Similarity rate must be lower than 20%, otherwise you will receive penalty, over than 40%, you will receive zero mark.

3
Answered Same Day Aug 01, 2020 ACC305

Solution

Abr Writing answered on Aug 03 2020
132 Votes
Principles of Ethics
Answer 1
(a) An auditor has to comply with the ethical principles whenever he is conducting the audit work. As per the APES 110 the ethical principles of audit are as follows:
· Integrity: The approach of the auditor towards the audit must be straightforward and he has to remain honest with during the whole process.
· Objectivity: This principle suggests that the opinion given by the auditor on the business of the client must be unbiased and he should not be affected from the opinion of the others.
· Independence: The auditor has to remain independent during the audit period and take the decisions by using his professional judgment.
· Confidentiality: It is one of the important principles that states that the auditor has to maintain confidentiality about the work done by him during the audit period and cannot disclose the information to the others unless it is required by the law.
· Professional Behavior: The auditor has to maintain professional behavior during the audit and uses his knowledge and skills to complete the audit without negligence.
Jenny Wang is the senior auditor on the audit of Panania Cars Pty Ltd. In the given case, the sales manager of the company advises Wang that they are providing discount to their long established customers. And he offers Wang to purchase the car on discounted price as she is the auditor of the company for past six years.
Hence, there is a violation of ethical principle. If Wang purchases the car on discount then it is a violation of its objectivity. The discounted price is for their long established customers and Jenny Wang is the auditor of the company.
(b) An auditor of an entity may receive gifts from his client and this kind of gifts may affect his judgment and it can create threat to the fundamental principles of audit. The nature, value and the intention of the gifts defines that whether it is a threat to fundamental principles of audit. If the gift offered by the client is reasonable and it is offered in the normal course of business then there is no problem but the gift is given to affect the decision making of the auditor then it is violation of ethical principle.
In the given case, Katrina Wearne is the auditor of the Lancom Cosmetics and she received the gift from the company in the form of cosmetic of worth $350. The value of the gift is reasonable and it is given to the Katrina Wearne on the Christmas. So it can be assumed that there is no violation of ethical principal.
(c) As per the principle of professional behavior, it is the duty of the auditor to comply with the necessary laws and regulations during the audit. The auditor has to work with professional due diligence and due care and without negligence. If he does not with professional due care and due diligence then he violates the principles of ethics.
In the given case, D. Ma
on is the chartered accountant is hired for giving the assistance in the installation of computer system for maintaining production and inventory records. D. Ma
on has no experience in this line and he engages a consultant to ca
y out the review. The work is highly technical and because of that Ma
on is unable to review the work and when the work of the consultant is completed D. Ma
on approves the work done by the consultant.
The auditor in this case violates the principle of professional behavior as he does...
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