ACC300 Auditing

(a) James Bromley ,Auditor, is retiring in 5 days and has been operating a tax,audit and general accounting  practice .James has obtained permission from his clients to reveal their tax details to Jayne Godfrey, the new Accountant purchasing the practice .James provides these files to Jayne and
also provides some helpful information to Jayne about other aspects of his clients-their products,services and potential services they could use.

(b) Fred Hingarra,Auditor ,has just spent 6 years overseas,playing soccer professionally  and has now come home to restart his accounting practice.He has invested in professional indemnity insurance
and has applied to audit a new public company and been accepted to carry out the audit .This will be his first audit since returning from overseas .

( c) The Asquith Accountants are advertising a special in the local paper that they guarantee to provide their clients with a tax refund within 10 days .

(d) Amy  Harriss ,Auditor,is an auditor for a chartered accounting firm  during the day and has just been asked to be  the treasurer of the local athletics club .The athletics club is a not for profit institution and Amy’s firm does not audit the athletics club.

You are asked to review each of the above situations and state whether there has been a violation of the General Ethical Principles and if there has state which ethical principle has been violated.You are also asked to briefly state your reason for stating that there has/hasn’t been a violation of the ethical principles .

As per the code of ethics that have been laid down for the auditors, each auditor has the duty of respecting the value and the ownership of the information that they receive and would not disclose in the information without any adequate authority unless and until there is a legal or a professional obligation for the compliance of the same (The IIA, 2017).

As per the case study, the auditor of the company is in the course of retiring and had the work of tax audit, general accounting practice of a company. Now when another auditor is taking over his practise, he is duty bound to disclose all of the information that he is in possession of with regard to his client. But it is also true that he is duty bound to inform about such disclosure to his client. This has already been done by James. Hence, there is no violation of the ethical principles.

The auditors are expected to apply the following when it comes to conducting his duties:

• He must establish trust and provide a basis for reliance on which he would rely on their judgment
• He must carry on his duties with an utmost care and maintain a high level of professional objectivity when it comes to gathering, evaluating and communicating the information about the activities and the processes
• He must confide any information that he has obtained during his course of employment
• He must possess all the necessary knowledge, skills and experience that are required to carry on their duties (The IIA, 2017).

In the given case study, Fred had been playing soccer professionally but has now restarted his accounting practices, then assuming that the above principals have been duly satisfied with, there is no violation of any ethical principle.

As per the ethical principles, an auditor is expected to undertake only the professional services on which he has no control over and that the member or the member of the firm is expected to compete with his professional competence (PCAOBUS, 2017).

In the given case, study, the firm advertises that it guarantees tax refunds which is wrong. This is so since the accountants, they have been guarantying the tax refund which is beyond their control and is not also in their professional capacity.

The auditors are expected to apply the following when it comes to conducting his duties:

• He must establish trust and provide a basis for reliance on which he would rely on their judgment
• He must carry on his duties with an utmost care and maintain a high level of professional objectivity when it comes to gathering, evaluating and communicating the information about the activities and the processes
• He must confide any information that he has obtained during his course of employment
• He must possess all the necessary knowledge, skills and experience that are required to carry on their duties

Though Amy has never conducted an audit of a non-profit organisation, but if she is able to carry on the duties as per the above stated code of ethics, then there is no general principles violation.

References:

na.theiia.org. (2017). CODE OF ETHICS. [online] Available at: https://na.theiia.org/standards-guidance/Public%20Documents/IPPF_Code_of_Ethics_01-09.pdf [Accessed 18 Sep. 2017].

Na.theiia.org. (2017). Pages   - Code of Ethics. [online] Available at: https://na.theiia.org/standards-guidance/mandatory-guidance/Pages/Code-of-Ethics.aspx [Accessed 18 Sep. 2017].

pcaobus.org. (2017). ETHICS AND INDEPENDENCE RULES CONCERNING INDEPENDENCE, TAX SERVICES, AND CONTINGENT FEES. [online] Available at: https://pcaobus.org/Rulemaking/Docket017/2005-07-26_Release_2005-014.pdf [Accessed 18 Sep. 2017].