ACC300 AUDITING ASSIGNMENT Worth 20%
Due Week 11
Question 1 (12 marks)
The following are a number of different situations where there may be violations of the ethical
principles .You are asked to state whether there has been a violation of the Accountants Code of Ethics and state which ethical principle has been violated and briefly providing a reason(s) for your opinion:
(a) Alfred Jarmon , professional accountant, does the bookkeeping, prepares the tax returns and provides management services for Luner L td .When providing these services it frequently advises its clients to buy its computer equipment from Computer Services Ltd. Computer Services has agreed to pay Jarmon a 10% commission if the referral leads to sales for Computer Services .
(b) Wrench and company,Chartered Accountants,keeps details of its clients in its computer records
at its office .Since it also has time available it will allow its clients to use its computers if they require
them.If necessary Wrench will arrange for members of its staff,mainly administration but sometimes
from the audit branch to assist with the input of data for these clients.The staff from the Audit section can be involved in the audit of clients, depending upon the Audit Partners requirements.
(c ) Katrina Ng is a manager on the audit of a not for profit entity.She is also a member of the Board of Directors for the not for profit entity,but the position is honorary and does not involve her acting
in a management capacity for the not for profit firm.
(d) Peter Beetson , a public accountant , provides tax services, management advisory services,bookkeeping services and conducts audits for his Accounting practice .Peter also is the treasurer of the Northbridge Joggers Club ,a small not for profit club which he runs with on a weekend .
(e) The Berowra Accountants, have taken advertisements in the local newspaper with a bright colourful full page pictures of the staff and giving details of their being the top Accountants in the district and how they always get the highest tax deductions of all Accounting firms in the region.
(f) David Chatham conducted an audit of Olive Ltd for the year ended 30 June 2017 .David has just started his audit of Olive for the year ended 30 June 2018 .The audit fees for the year ended 30 June 2017 have not yet been paid .
Question 2 (8 marks)
Indicate the type of opinion that should be expressed in each of the following situations, providing reasons for your choice .
(a) The auditor was unable to obtain confirmations from four of the client’s major customers that
were included in the sample .The auditor was able to satisfy himself about the balances of these accounts using other audit procedures.
(b)The client restricted the auditor from observing the property ,plant and equipment .The property, plant and equipment is a material part of the assets making up 25% of total assets.
(c) Management have excluded from the financial report the necessary disclosures in relation to
a contingent liability .If this becomes an actual liability it will have a material effect on the financial
report.The item is not expected to any other material effects on the financial statements.
(d) A client has been using the previous Accounting standards in preparing its accounts .This has lead to material misstatements in a number of assets as well as a substantial misstatement of profit .Due to its wanting to just finalise its accounts it is not prepared to amend its financial statements although it can calculate the extent of the misstatements. which is disallowed under
the Australian Accounting Standards.