What should belinda do

Assignment Help Auditing
Reference no: EM131172923

Case Study and Report

Length: 2000 words

Task Question 1

Case:

Battersby and Associates Chartered Accountants is a successful mid-tier accounting firm with a large range of clients across Australia. During the 2015 financial year Battersby and Associates gained a new client, Medical Services Holdings Group (MSHG), which owns 100 per cent of the following entities:

. Green Grass Hospital, a private hospital group

. Green Gardens Nursing Home Pty Ltd, a private nursing home

. Complete Cancer Care Limited (CCCL), a private oncology clinic that specialises in the treatment of cancer.

Year end for all MSHG entities is 30th June.

CCCL owns two relatively old linear accelerators used in radiation therapy. Recently radiographers using these linear accelerators have raised concerns that they have adverse radiation impacts on patients.

The CEO of CCCL, Adam Chase, has approached Belinda Battersby, the audit partner responsible for the financial report audit, about undertaking an engagement in respect of the linear accelerators. Adam has requested Belinda provide an opinion that the linear accelerators are fit for use. Adam pointed out that the CCCL audit is up for tender the following year and suggested that Battersby and Associates might like to take on the linear accelerators engagement without charging a fee as a gesture of goodwill.

Source: Adapted from the CA Program's Audit and Assurance exam, December 2008.

Required

What should Belinda do? Use the Code of Ethics for Professional Accountants and the American Accounting Association (AAA) Model to help consider your response to this question.

The best way to present your answer is in a table as below:

American Accounting Association Model

Decision making process

1. Determine the facts

The facts are ...

2. Define the ethical issues

 

3. Identify the major principles, rules and values

 

4. Specify the alternatives

 

5. Compare values and alternatives

 

6. Assess the consequences

 

7. Make your decision

 

 

Question 2

Good corporate governance reduces the audit risk. Independent directors have been recognised as critical to good corporate governance.

Task

Prepare a report for your fellow students that:

. describes the current Australian recommendations for the inclusion of independent directors in a board of directors,

. evaluates the continuing need for independent directors, and

. identifies barriers to the effectiveness of the role of independent directors.

Rationale

This assessment has been designed to assess your ability to:

. Be able to explain and critically evaluate influences on audit and assurance services including: Australian and international professional standards, statutory and common laws, regulatory bodies, and public expectations within a global market;

. Be able to exercise critical and reflective judgment and appreciate the value of ethical practice.

Reference no: EM131172923

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Reviews

kar1172923

8/19/2016 6:15:16 AM

Legislative requirements: Corporations Act 2001 (continued): Section 300(1)(ca): Former auditors. Directors’ report is to include names of each officer of client who was a former partner or director of current auditor. Section 324CI: Member of audit firm Cannot become director, company secretary or member of senior management of a client until two years after ceasing to be with audit firm. Section 324DA: Rotation of audit partners. Lead or review partner for five successive years cannot play a significant role in the audit of that entity for at least another two successive years.

kar1172923

8/19/2016 6:14:58 AM

Auditor independence:- Independence is a key characteristic of an audit or assurance service provider. In order for auditors to add credibility to financial reports or other subject matter, they need to remain independent. Independence is one of the fundamental ethical virtues or principles required by APES 110.

kar1172923

8/19/2016 6:14:37 AM

American Accounting Association Model:- Determine the facts Define the ethical issues Identify the major principles, rules and values Specify the alternatives Compare values and alternatives Assess the consequences Make your decision

kar1172923

8/19/2016 6:14:07 AM

Ethical decision models: There are a number of ethical decision-making models that have been developed to assist in sound ethical decision making. The key factors to be considered in ethical conflict resolution are: relevant facts ethical issues involved fundamental principles related to the matter in question

kar1172923

8/19/2016 6:13:42 AM

Ethical codes and disciplinary rules: APES 110 ‘Code of Ethics for Professional Accountants’, issued by the Accounting Professional and Ethical Standards Board (APESB), indicates that members are expected to comply with the spirit as well as the letter of the rules. APES 110 sets out the main ethical pronouncements that relate to the undertaking of an audit. ASA 200.14/ISA 200.14 and ASA 102.5 require that auditors comply with relevant ethical requirements. Ethics are principally attitudes of mind rather than compliance with written rules of conduct.

kar1172923

8/19/2016 6:12:21 AM

It requires both knowledge of moral principles and also skills in applying them to problems and decisions. Ethical codes and disciplinary rules APES 110 ‘Code of Ethics for Professional Accountants’, issued by the Accounting Professional and Ethical Standards Board (APESB), indicates that members are expected to comply with the spirit as well as the letter of the rules. APES 110 sets out the main ethical pronouncements that relate to the undertaking of an audit. ASA 200.14/ISA 200.14 and ASA 102.5 require that auditors comply with relevant ethical requirements. Ethics are principally attitudes of mind rather than compliance with written rules of conduct.

kar1172923

8/19/2016 6:11:49 AM

Topic 2: Governance and Ethics explain the concept of corporate governance and the relationships between the auditor, the client and the public; discuss the nature and responsibilities of audit committees; gain an appreciation of how the quality of professional services is assured demonstrate an understanding of auditing standards gain an appreciation of the need for a professional code of conduct; apply the ethical rulings of the accounting bodies using sound ethical decision-making techniques; explain the concept of independence Professional ethics and ethical theory Ethics are concerned with the requirements for the general well-being, prosperity, health and happiness of people.

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