ACCT3708 Auditing and Assurance Services For Conceptual Framework

You need to state whether they are or are not a breach of the ethical requirements of APES110 and if they are a breach of the ethical requirements state which ethical principle has been breached :

(a)The Mortdale Accounting firm had carried out several audits of public companies in the last year.It now provided the working papers to the Penshurst Accountants who were carrying out a peer review of the audits by Mortdale Accounting.The Mortdale Accounting firm does not advise its clients of these reviews.

(b) Jan Dungog,a CPA , applies to a local public accounting firm of Chartered Accountants, for a position ,but asks the local public accounting firm not to contact her current employer.The local public accounting firm do not contact her contact her current employer but hire her without contacting them or her other referees .

Introduction about APES 110

Accounting Professional & Ethical Standards Board Limited, commonly known as APESB, has introduced APES 110 in June 2006 and this act was amended in the year 2008. APES 110 are the code of ethics for the professional accountants. APES 110 consist of all the principles and standards of accounting and the responsibility of the auditors. All the accountants and auditors of Australia must comply with all the principles and standards of APES 110 at the time of providing professional services. In order to bring ethical consideration in the process of accounting and auditing, APES 110 have legal enforceability. There are three parts of this code. The first part of APES 110 consist of the fundamental principles of ethics in the accounting and auditing profession. The second and third part is about the application of the conceptual framework in certain situations (apesb.org.au 2017).

It is the responsibility of the auditors to comply with all the principles and standards of APES 110 at the time of conducting the audit operation of the organizations. As per the APES 110, the principle of Confidentiality is a major principle that recoded in Section 140 (Townsend 2014). This principle states that it is the responsibility of the auditors not to disclose the important documents and information of the audit client to any third party. Penshurst Accountants has received the audit papers from Moderate Accounting and Moderate Accounting has done it by not informing the audit client. With the help of this act, Moderate Accounting has breached the principle of Confidentiality.

One of the major principles of APES 110 is the principle of Professional Appointment described in Section 210. As per this principle of APES 110, at the time of accepting the job application of a person as an auditor or accountant, it is the responsibility of the employer to conduct b and investigation to confirm that whether there is any risk involved in the selection process. As per the provided situation, Jan Dungog has applied for a job position in a local company despite of working in a company currently. The employer of the local company has accepted the application of Jan Dungog without making an investigation. Hence, as per APES 110 Section 210, the company has violated the principle of Professional Appointment (Ge, Q., Simnett and Zhou 2016).

An auditor of a business organization can have his/her own business and this process does not breach any code of ethics in APES 110. However, as per the principle of Provision of Non-assurance Services to Audit Clients in Section 290 of APES 110, the auditors of the organizations do not have the authority to provide any kind of non-audit services that is no mentioned in the audit agreement (Carey 2015). As per the provided case study, it can be observed that Wendal Sailor, the auditors of the organizations provides additional business advices to his audit clients apart from the audit agreements. This act of Wendal Sailor breaches the above-mentioned principle of Provision of Non-assurance Services to Audit Clients in Section 290 of APES 110.

In the provided case study, it can be seen that besides being an audit partner of a non-profit charitable organization, Judith Durham is also holding the position of member of Board of Directors of a business organization. However, she is not involved in the any kind of management function as she is holding an honorary position. As per the principle of APES 110, an auditor of the organization cannot hold the position of the member of board of directors in any organization. The case is different for Judith Durham as she is not an active member of the board of director of the company. Thus, she does not breach any principle of APES 110 (apesb.org.au 2017).

It is mentioned in the principle of Marketing Professional Services in Section 250 of APES 110 that the auditors need to take permission from respective authority at the time of selling the audit papers (Mock et al. 2012). Otherwise, threat in the auditing profession may arise. The provided case states that Ernie Dengate has sold all of the papers of his accounting practices without obtaining the required permission. The new accountant, Jago has bought all of his accounting practice papers. From the above case, without obtaining the permission of selling the papers, Ernie Dengate has breached the above-discussed ethical principle of Marketing Professional Services in Section 250 of APES 110. 

References

apesb.org.au. (2017). AN OVERVIEW OF APES 110 CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS. [online] Available at: https://www.apesb.org.au/uploads/meeting/board_meeting/24112014043919_agenda-item-16-f-cpa-australia-s-overview-of-apes-110.pdf [Accessed 17 May 2017].

apesb.org.au. (2017). APES 110 Code of Ethics for Professional Accountants. [online] Available at: https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf [Accessed 21 May 2017].

Carey, P.J., 2015. External accountants’ business advice and SME performance. Pacific Accounting Review, 27(2), pp.166-188.

Ge, Q., Simnett, R. and Zhou, S., 2016. Ethical and Quality Control Requirements When Undertaking Assurance Engagements.

Mock, T.J., Bédard, J., Coram, P.J., Davis, S.M., Espahbodi, R. and Warne, R.C., 2012. The audit reporting model: Current research synthesis and implications. Auditing: A Journal of Practice & Theory, 32(sp1), pp.323-351.

Townsend, S.R., 2014. The regulation of auditor ethical behaviour in Australia (Doctoral dissertation, Macquarie University).