ASSIGNMENT QUESTION
The following are independent
situations and you should refer to APES (Accounting Professional and Ethical
Standards 110 “Code of Ethics for Professional Accountants”)and the
Corporations Act 2001 as a minimum for each situation. You need to identify any
breaches (under what section) and why. You should also consider any remedy or
alternative course of action that should have been considered for each where
appropriate.
There is no word limit set for this
assignment but it is expected that each question will be well-covered and
considered. Guidelines would be that each question should be of between 400-600
words
1) Rodney Brick is completing a Master
of Accounting part-time and has taken on a role as an auditing assistant with
an audit/accounting firm and his first job is to assist with auditing the books
of Daffey Jones Ltd, a major retailer. Whilst undertaking the audit, Rodney
comes across certain financial information that he believes will assist him in
completing one of the auditing assignments he is currently working on so he
copies the information and uses it in the assignment, although he is careful by
removing all reference to Daffey Jones in order to preserve the client’s
confidentiality.
Question: Has Rodney breached any
auditing standards/regulations and if so, what and why? (6 marks)
2) Bertha Bigga has been the engagement
audit partner on the Wait Alert Limited (“WA”) account for a number of years.
Roughly one year ago, WA’s long-standing company secretary resigned and the
company took almost nine months to find a replacement. At WA’s request, Bertha
performed company secretarial duties during this period of time.
Question: Do you have any concerns and
are there any breaches that have occurred here? (4 marks)
3) John Bartram is the son of the
factory manager of one of your firm’s major audit clients, John Worst Foods
Limited. John is studying accounting, with a specialisation in auditing at
Holmes Institute. John applied for work during the summer where he could both
earn money as well as gain first-hand experience in his area of interest. He is
assigned to the audit of John Worst’s Foods Limited where part of his audit
work consisted of testing the internal controls of the cash payments and cash
receipts system.
Q: What is the issue in this situation
and what sections of the Act are bought into question? Is there something that
should be in place with the audit firm?
(4 marks)
(4) Ocean Adventures Limited is a large
importer/wholesaler of luxury cruise boats and is currently experiencing
financial difficulties. Their audit firm is PVC Partners but they have not paid
the audit fees for the past three years. The audit partner recently threatened
to resign from the audit if the outstanding fees were not paid. To prevent this
occurring, Ocean Adventures offered to supply AUDITRUS with a nine-metre cruise
boat as payment. The partner accepted this offer in full consideration of the
outstanding fees, even though the boat was only worth 75% of the balance.
As a gift, Ocean Adventures also gave
the partner a 15% shareholding in an unrelated company. At present these shares
are worth $21,500.
Q: What if any, issues exist in this
situation? Should PVC have accepted boat and the gift (consider each one
separately in your answer). (6 marks)
