Exam (elaborations)
AUE3761 Assignment 1 of 2021
- Course
- Aue3761 - The Audit Process
- Institution
- University Of South Africa (Unisa)
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AUE3761 ASSIGNMENT 1 0F 20211. Fundamental principles of ethics
The CFO failed to comply with the following ethics as stipulated in the SAICA Code
of Professional Conduct:
(a) Integrity: Accountants are required to be straightforward, honest, fair and truthful
in their professional and business relationships. By directing the committing of
financial irregularities by being associated with materially false information and
by deliberately lying and providing misleading information he compromised his
integrity;
(b) Objectivity: Accountants should not allow bias, conflict of interest, and undue
influence of others to override or compromise professional or business
Judgements. By allegedly being instructed by one of the executive directors of
the company to cause the financial irregularities, his objectivity was impaired;
(c) Professional competence and due care: This ethical requirement need an
accountant act diligently and exercise sound judgement. The way the accountant
conducted himself recklessly through deliberately playing a part in this financial
irregularity which is not expected from professional accountants;
(d) Professional behaviour: The accounted acted in ways that discredits the
profession as users will not trust accountants if they have the perception that
accountants are capable of lying and falsifying records.
2. Matters that ISA Incorporated should consider when deciding whether or not
to accept Living Well as a new audit client.
(a) Competence, capability and resources
The firm should consider if they have the necessary skills, knowledge, expertise
and experience to audit the form of business of the entity and its applicable
reporting framework. The firm should assess if sufficient staff and time resources
are available to conduct the audit. All other support resources necessary to
conduct the audit should also be available.
(b) Ethical considerations
Before accepting the audit, the entity should meet the ethical requirements
according SAICA Code of Professional Conduct and provisions of the
Companies Act and the Auditing Profession Act. This includes integrity and
independence of the audit firm and the its members who will be conducting
audits.
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