Question: A. Daniel is the audit manager with Wong & Co. for the past five years. He has been asked by the partner of the firm

A. Daniel is the audit manager with Wong & Co. for the past five years. He has been asked by the partner of the firm to review a situation which has recently arisen with respect to a potential audit client of the firm. Bina Jaya Sdn Bhd's managing director; Anna has approached Wong & Co. to invite the firm to tender for its audit. Bina Jaya Sdn Bhd is a small, owner-managed company providing financial services such as arranging mortgages and advising on pension plans. The company's previous auditor; Amin & Partners has recently resigned. Anna states that this is due to a disagreement on the accounting treatment of commission earned and because "they think our controls are not very good". Daniel is aware that Bina Jaya Sdn Bhd is being investigated by the financial services authority for alleged non-compliance with its regulations. Besides providing audit services, Anna would also want Wong & Co. to provide business development advice. REQUIRED: (a) Discuss TWO (2) ethical issues in respect to the MIA By-Laws (on Professional Ethics, Conduct and Practice) that have arisen in the above case. (6 Marks) (b) Briefly suggest how each threat should be managed. (2 Marks) (c) Distinguish between independence in fact and independence in appearance. (2 Marks)

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