Question 1 8 marks The following cover various ethical situa

Question 1( 8 marks)
The following cover various ethical situations .For each you need to state whether there has been a
violation or no violation of a general ethical principle and if there is a violation which ethical principle
is violated.You need to also to briefly outline the reason for your answer in each situation .

( a) The Berowra Accountants are advertising a special in the local paper that they guarantee to provide their clients with a tax refund .

(b) Jamie Harvey ,Auditor,is an auditor for a chartered accounting firm during the day and has just been asked to be the treasurer of the local athletics club .The athletics club is a not for profit institution and Jamie’s firm only does audits of large public companies.

( c) The Pymble Accountants carried out the Audit of Monlec Ltd from July 7^th to the 2^nd September
2017 and Monlec have advised Pymble Accountants that the final payment is dependent upon receiving an “appropriate “ final report.

(d)The Winton Accountants have just completed their audit of the Motoring Services Company and have provided all the working papers to the staff of Chadwick Chartered Accountants who have been
asked by the Institute of Chartered Accountants to carry out a Quality Review of the Audit work carried out by Winton Accountants during a recent audit

Solution

Situation 1: Yes it violates the general ethical principle of Integrity. The reason is that advertising is allowed by an auditor but not using the terms like well reputed or any other guarantees like tax refunds etc...This is a discredit to the profession and hence considered as violation of Integrity.

Situation 2: No violation is done because Jamie Harvey being an auditor in a firm which does only audits of large company audits is no way related to a non profit organisation. So the auditor did not violate any ethical principle.

Situation 3: Yes it violates the principle of objectivity because the audit report is not independent of any bias. The auditor thus violates the principle of objectivity.

Situation 4: Yes the auditor violates the principle of confidentiality. An auditor should maintain confidentiality of the records or information received by him in the process of conducting audit. Distribution of working papers to the staff violates confidentiality principle.

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