Client Acceptance

AAA – L3 – Q20 – Professional responsibility and liability

Discuss ethical and professional issues for MM & Co regarding client Pen Co's tax fraud investigation and Scot family's transactions.

Question

You are senior manager in MM & Co, a firm of Chartered Accountants. Recently, you have been assigned specific responsibility for undertaking annual reviews of existing clients. The following situations have arisen in connection with two clients.

(i) MM & Co was appointed auditor of Pen Co last year, and has recently issued an unmodified opinion on the financial statements for the year ended 31 March 2013. To your surprise, the tax authorities have just launched an investigation into the affairs of Pen Co on suspicion of under-declaring revenue. (7 marks)

(ii) Your firm has provided financial advice to the Scot family for many years and this has sometimes involved your firm carrying out transactions on their behalf. The eldest son, Gino, is to take up a position as a senior government official in a foreign country next month. (3 marks)

Required:
Identify and comment on the ethical and other professional issues raised by each of these matters and state what action, if any, MM & Co should now take.

Answer

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Tags: Audit firm responsibilities, Client Acceptance, Confidentiality, Ethics, Money laundering, Politically exposed persons, Professional conduct
Level: Level 3

Topic: Professional responsibility and liability

AAA – L3 – Q15 – Practice Management

Advise new auditors on ISOM 1 considerations for accepting a nomination as auditors of a former client’s company.

Question

Kofi Amo and Kwame Osei, who recently qualified as professional accountants, have decided to enter into professional practice under the firm name Amo Osei & Partners. These two were trainee accountants at an audit and assurance firm for three years before qualifying.
For their first engagement, the CEO of Adom Ltd has nominated Amo Osei & Partners for appointment as auditors of his company, though Adom Ltd was a former client of their former firm. Kofi Amo and Kwame Osei were never on the engagement team of Adom Ltd.
As beginners, Kofi Amo and Kwame Osei intend to follow best practice as required by ISOM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements or Other Assurance or Related Services. However, they are not clear on the matters they have to consider in their acceptance decision according to the standard. They have approached you, a senior partner of their former firm, for advice.
Required:
Advise Kofi Amo and Kwame Osei on the matters they may have to consider in relation to the acceptance decision on their nomination.

Answer

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Tags: Audit Firm, Audit Practice, Client Acceptance, Engagement Decision, Independence, ISOM 1, New Client, Professional Ethics, Quality management, Risk Assessment
Level: Level 3

Topic: Practice management

AAA-L3 – Q6- Rules of Professional Conduct

Evaluate impact of business relationship, auditor parting, and conflict of interest on accepting Vega Investigations as an audit client.

Question

(a) Impact of the three pieces of information

Major service provider to your firm
Acrimonious parting with the previous auditors
The firm already represents the Tarkwa Investigations Group (TIG), a company involved in a hostile take-over of Vega. (b) Other factors to consider in making a decision as to whether to accept Vega as a client (c) Steps to take in accepting nomination

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Risk, Auditor Independence, Client Acceptance, Confidentiality, Conflict of Interest, Fee Dependence, Professional Ethics
Level: Level 3

Topic: Rules of Professional Conduct

Tag (SQ): Client Acceptance

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AAA – L3 – Q20 – Professional responsibility and liability

Discuss ethical and professional issues for MM & Co regarding client Pen Co's tax fraud investigation and Scot family's transactions.

AAA – L3 – Q15 – Practice Management

Advise new auditors on ISOM 1 considerations for accepting a nomination as auditors of a former client’s company.

AAA-L3 – Q6- Rules of Professional Conduct

Evaluate impact of business relationship, auditor parting, and conflict of interest on accepting Vega Investigations as an audit client.

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AAA – L3 – Q20 – Professional responsibility and liability

Discuss ethical and professional issues for MM & Co regarding client Pen Co's tax fraud investigation and Scot family's transactions.

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AAA – L3 – Q15 – Practice Management

Advise new auditors on ISOM 1 considerations for accepting a nomination as auditors of a former client’s company.

You're reporting an error for "AAA – L3 – Q15 – Practice Management"

AAA-L3 – Q6- Rules of Professional Conduct

Evaluate impact of business relationship, auditor parting, and conflict of interest on accepting Vega Investigations as an audit client.

You're reporting an error for "AAA-L3 – Q6- Rules of Professional Conduct"

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