Ernie Dengate breached the principle of Confidentiality – The member having sought only the permission to release tax working papers, he wasn’t supposed to disclose the other working papers to the new accountant, Jago. Section 140 of Australian Accounting Standards, requires all members to refrain from disclosing information confidential to an organization unless seeking relevant information from the client or by the court order legal proceeding. Even after members’ service termination with the client, is not supposed to disclose any information unless permitted or has the professional duty to do so. In this, Ernie should have obtained the relevant permission before disclosing the other working papers, (Louwers, et.al., 2015).
In regards to Fred Nerk, a public accountant case, it may lead to creating a conflict of interest which can consequently result in a threat to objectivity or professional behavior. The auditing standards require the independent auditor to ascertain and provide an assurance to the books of account. But in this case, the same member doing the bookkeeping is doing the audit, this can adversely affect the opinion of the report by compromising their professional judgment.
All good does not guarantee the information confidentiality for its client “Branch Company” since the information stored in different computers can easily leak. Thus, the principle of confidentiality is not observed.
The accounting and auditing body requires all members be it on the line of duty or representing the public conduct themselves in a manner which does not disrespect or disrepute the profession. In this case, James Jameson wasn’t on the line of duty and therefore he does not violate the code of ethics. Alternatively, Jame Jameson and its company represent the public image and therefore he should have not conducted himself in a manner which may create a bad image for the company and therefore violating the principle of professional behavior.
It is unethical for an Australian auditing firm to disclose the clients’ information without its consent. As it is required, confidentiality should be always maintained and the Mortdale Accounting firm should not have provided the working papers to the Penshurst Accountants for peer review without consent from its clients. Alternatively, in this case of the peer review, the member has the professional right to disclose the information for quality review if not prohibited by the law. Please note, Australian legal and regulatory advises members to first seek consent, (Deegan, 2012).
Local public accounting firm by not contacting Jan’s current employer may create the threat to integrity. The practicing member should be trustworthy and honest. In the event of an appointment of the member, the employer shall obtain appointee information in order to safeguard violation of such fundamental principles and also securing clients’ images.
Regular contacting of clients’ firm by the Wendal Sailor can create self- interest threat which can compromise the fundamental ethical principles. By selling other services to the same clients, creates a business relationship which to the same level affects the professional services.
Judith being a partner on an audit of not for a profit charitable organization and the same time an honorary board member inflict the fundamental principles of accounting and auditing. In this case, she creates familiarity and self-interest threats which can consequently influence and affect professional audit outcome. This also damages the principle of objectivity since Judith engagement with an organization compromises the audit functions, (Flood, 2012).
Question 2
Unqualified opinion /clear opinion – With no material misstatement presented, and with an assurance that no additional information is held for future, and having all information required given and the financial statement presenting a free and fair view. Then, the auditor can give the unqualified opinion in this case.
Advance opinion – Having the client not adhering with the Australian accounting standard, does not guarantee to present a free and fair view of the financial statement. Non-adherence with the standards signifies presentation of the misleading information which according to the auditor cannot depend upon thus, giving an advance opinion, Gibson and Goyen. Australian Accounting Standards
Qualified/advance opinion – In this case, the auditor may decide which opinion to give depending on the materiality effect on the financial statement. That is, if the method has less effect in the inventory value reported on the financial statement, then the auditor can give a qualified opinion, while if the value effect is extreme, then the auditor can give advance opinion depending on the degree of materiality.
Qualified opinion – Having the Numark auditor satisfied with the information provided and getting no material misstatement, the liquidation of the major customer may not be automatically due to the operation of the Numark, though may have some influence on the financial statement which can affect the auditors’ opinion. Because of this reason, the auditor may decide not to give the unqualified opinion but give the qualified opinion in this case.
Qualified opinion – Obtaining the relevant information by an auditor is part of the process when deciding on the opinion type to give. Though in this case, the auditor was able to find balance with other methods, it would be appropriate to gather all evidence and give an opinion. Since no material misstatement reported, the auditor can give the qualified opinion.
Disclaimer opinion – This is given when the auditor is unable to gather material information of the financial statement. In this case, since the auditor is restricted to obtain the material information, he can decide to give disclaimer opinion.
Qualified/Disclaimer opinion – In this case, assuming that the contingent liability will not have material effect on the financial statement, the auditor can give qualified opinion to express satisfaction with the financial statement. Alternatively, the auditor can decide to terminate the engagement due to missing information and give a disclaimer opinion.
Advance/Disclaimer opinion –With such missing information, an auditor may decide to give advance opinion, showing material misstatement or disclaimer opinion to terminate the engagement.
References
Deegan, C., 2012. Australian financial accounting. McGraw-Hill Education Australia.
Flood, J.M., 2012. Wiley GAAP 2013: Interpretation and application of generally accepted accounting principles. John Wiley & Sons.
Gibson, K. and Goyen, M., Australian Accounting Standards.
Louwers, T.J., Ramsay, R.J., Sinason, D.H., Strawser, J.R. and Thibodeau, J.C., 2015. Auditing & assurance services. McGraw-Hill Education.
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