Describe the ethical threats, Auditing

Assignment Help:

(a) State the FIVE threats contained within Auditor's Code of Ethics and Conduct and for each threat list ONE example of a circumstance that may create the threat.

(b) You are the audit manager of DT & Co and you are planning the audit of LVF Co, which has been an audit client for four years and specialises in manufacturing luxury mobile phones.

During the planning stage of the audit you have obtained the following information. The employees of LVF Co are entitled to purchase mobile phones at a discount of 10%. The audit team has in previous years been offered the same level of staff discount. During the year the financial controller of LVF was ill and hence unable to work. The company had no spare staff able to fulfill l the role and hence a qualified audit senior of DT & Co was seconded to the client for three months. The audit partner has recommended that the audit senior work on the audit as he has good knowledge of the client. The fee income derived from LVF was boosted by this engagement and along with the audit and tax fee, now accounts for 16% of the firm's total fees.

From a review of the correspondence files you note that the partner and the finance director have known each other socially for many years and in fact went on holiday together last summer with their families. As a result of this friendship the partner has not yet spoken to the client about the fee for last year's audit, 20% of which is still outstanding.

Required:

(i) Describe the ethical threats which may affect the independence of DT & Co's audit of LVF Co; and

(ii) For each threat explain how it might be avoided.


Related Discussions:- Describe the ethical threats

Walkthroughs for auditor, Q. Walkthroughs for auditor? Walkthroughs pro...

Q. Walkthroughs for auditor? Walkthroughs provide the auditor with evidence to: 1. Confirm auditor's understanding of the process flow of transactions. 2. Confirm auditor

Duties of an auditor in the stocktaking process, Problem: (a) Your cli...

Problem: (a) Your client has sought your advise on the procedures to be adopted for carrying out the stocktaking which is based on a year-end count. You are required to prepa

Advantages and disadvantages of internal audit?, Benefits of Internal Audit...

Benefits of Internal Audit are following: It is in-expensive. No charted accounted is needed to audit internally. Faults will be removed before preparing financial stateme

Reserves - audit process, Reserves - Audit Process Movements in reserv...

Reserves - Audit Process Movements in reserves need disclosure in the balance sheet, the loss and profit account, the director's reports or in the notices to the accounts. The

Audit approach - audit of accounting estimates, Audit Approach - Audit of A...

Audit Approach - Audit of Accounting Estimates The accounting and auditing matters are mainly concerned along with recognizing the point in time at that the initial disclosure

Business risk analysis, Business Risk Analysis Business risk can be ana...

Business Risk Analysis Business risk can be analyzed between external and internal risks: External risks: Changing legislation (e.g. minimum wage) Changing inter

Internal control systems, Internal Control Systems ISA 400: “Internal c...

Internal Control Systems ISA 400: “Internal control system” means all the policies and processes (i.e., internal controls) accepted by the management of an entity to assist in

Counter - indications, Counter - Indications That the auditor has foun...

Counter - Indications That the auditor has found indications of going related to non-applicability does not of itself justify instantly conclusion that the entity is not a goi

Planning for stock taking, Planning for Stock taking Stock taking shou...

Planning for Stock taking Stock taking should be planned well in carried out and advance carefully and systematically through persons fully informed of the duties involved. Th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd