a. A good Auditor is an independent auditor (5 Marks)

1. Definition of Independence:
   • Independence refers to the ability to perform audit work free from bias, undue influence, or personal interest, ensuring objectivity in professional judgment.
2. Importance in Auditing:
   • Independence underpins the credibility of an auditor’s opinion and ensures stakeholders trust the financial statements.
3. Types of Independence:
   • Independence of mind: Unbiased mindset allowing auditors to make decisions solely based on evidence.
   • Independence in appearance: Ensures the auditor is perceived as unbiased by external parties.
4. Regulatory Framework:
   • Compliance with the IESBA Code of Ethics and ISA 200 is necessary to demonstrate auditor independence.

b. Confidentiality is not an adequate defence in money laundering cases (5 Marks)

1. Professional Duty of Confidentiality:
   • Accountants have an ethical duty to maintain client confidentiality, as outlined in the IESBA Code of Ethics.
2. Exceptions in Money Laundering Cases:
   • Under anti-money laundering laws (e.g., the Nigerian Money Laundering (Prohibition) Act), confidentiality cannot be used to shield criminal activities.
3. Legal Obligations:
   • Professionals are required to report suspicious transactions to the Financial Intelligence Unit (FIU) or other relevant authorities, overriding confidentiality obligations.
4. Consequences of Non-Compliance:
   • Failure to report can lead to legal penalties for aiding or abetting money laundering.

c. Obligations for detecting and reporting money laundering (5 Marks)

1. Detection Obligations:
   • Audit firms must implement internal controls and risk assessments to identify potential money laundering activities.
2. Reporting Obligations:
   • Professionals are required to file Suspicious Activity Reports (SARs) with authorities, detailing transactions suspected of facilitating money laundering.
3. Training and Awareness:
   • Staff must be trained to recognize and report suspicious activities promptly.
4. Legal Framework:
   • These obligations are guided by anti-money laundering laws and professional standards.
5. Compliance Monitoring:
   • Regular audits and monitoring ensure adherence to anti-money laundering protocols.

d. Acting for competing clients with acceptable safeguards (5 Marks)

1. Conflict of Interest:
   • A firm acting for two competing clients creates a potential conflict of interest, which must be managed to maintain integrity and independence.
2. Acceptable Safeguards:
   • Implementation of information barriers (“Chinese Walls”) to prevent the flow of confidential information.
   • Obtaining informed consent from both clients regarding the potential conflict.
   • Assigning separate engagement teams for each client to maintain confidentiality.
3. Compliance with Ethical Standards:
   • The IESBA Code of Ethics permits such arrangements if safeguards are in place to eliminate threats to objectivity.
4. Reputation Risk Management:
   • Firms must ensure transparency to protect their reputation and relationships with both clients.