Professional Ethics – Page 2

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 – Q8 – Rules of professional conduct

Outline points for a paper on money laundering obligations for an audit firm, including definitions, offenses, and firm responsibilities.

Question

Points to be included in paper for partners re money laundering

Answer

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Topic: Rules of Professional Conduct

AA – L2 – Q11 – Professional Ethics and Code of Conduct for Auditors

Explain why auditor independence is essential and discuss advantages/disadvantages of auditors providing consulting services.

Question

Independence

The responsibilities of external auditors are not always well understood. When external auditors provide non-audit services to their audit clients, it is essential that the auditors make a clear distinction between their audit and non-audit responsibilities.

Required

(a) Explain why it is essential for external auditors to be independent of their clients.

(b) Explain the advantages and disadvantages of external auditors providing consulting services to their audit clients.

Answer

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Tags: Auditor Independence, Ethical Threats, IESBA Code, Non-Audit Services, Professional Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors (IESBA Code)

AA – L2 – Q9 – Regulatory Framework for Auditing

Discuss current audit regulations and reasons for criticism regarding standards, fraud, non-audit services, and auditor tenure. Discuss reasons for criticism of current audit regulations on standards, fraud, non-audit services, and tenure.

Question

The auditing profession has been criticised recently for its role in monitoring potential corporate failure. Radical reforms have been called for in the way the audit is regulated. For example, there has been a call for a change of legislation in the following ways:

Auditing standards: Auditing standards should be set and enforced independently from the accounting profession.
Fraud: Auditing firms should have a duty to detect and report fraud.
Non-audit services: Non-audit services supplied to an audit client should be stopped.
The duration of the appointment of auditors: The appointment of auditors should be for a maximum period of seven years.

Required:
(a) Describe the current regulatory and professional requirements relating to each of the headings listed above.
(b) Discuss the reasons why you feel the audit profession has been criticised over the current regulations in the above areas.

Answer

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Tags: Auditing Standards, Auditor Tenure, Fraud Detection, IESBA Code, Non-Audit Services, Professional Ethics, Regulatory Reform
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors (IESBA Code)

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

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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): Professional Ethics

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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.

AAA – L3 – Q8 – Rules of professional conduct

Outline points for a paper on money laundering obligations for an audit firm, including definitions, offenses, and firm responsibilities.

AA – L2 – Q11 – Professional Ethics and Code of Conduct for Auditors

Explain why auditor independence is essential and discuss advantages/disadvantages of auditors providing consulting services.

AA – L2 – Q9 – Regulatory Framework for Auditing

Discuss current audit regulations and reasons for criticism regarding standards, fraud, non-audit services, and auditor tenure. Discuss reasons for criticism of current audit regulations on standards, fraud, non-audit services, and tenure.

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 – Q15 – Practice Management

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

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AAA – L3 – Q8 – Rules of professional conduct

Outline points for a paper on money laundering obligations for an audit firm, including definitions, offenses, and firm responsibilities.

You're reporting an error for "AAA – L3 – Q8 – Rules of professional conduct"

AA – L2 – Q11 – Professional Ethics and Code of Conduct for Auditors

Explain why auditor independence is essential and discuss advantages/disadvantages of auditors providing consulting services.

You're reporting an error for "AA – L2 – Q11 – Professional Ethics and Code of Conduct for Auditors"

AA – L2 – Q9 – Regulatory Framework for Auditing

Discuss current audit regulations and reasons for criticism regarding standards, fraud, non-audit services, and auditor tenure. Discuss reasons for criticism of current audit regulations on standards, fraud, non-audit services, and tenure.

You're reporting an error for "AA – L2 – Q9 – Regulatory Framework for Auditing"

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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