Audit and Assurance Question - Ethics problem

Question 1 Answer all parts of this question Section 1 of the FRC Ethical Standard that applies to the audit of financial statements require all firms except the very smallest to appoint an ethics partner, who will be a senior partner with a good deal of authority within the firm, and who will be available for consultation on ethical matters for engagement partners and other matters of judgement that arise Required (a) Explain the ethical fundamental principle of the duty of confidentiality outlining three circumstances when auditors are entitled to breach that duty (5 marks) (b) As the ethics partner in a large firm of Chartered Accountants, Moss LLP state the ethical issues involved and what action should be taken, if any, of the following matters have been brought to your attention: (i) The audit fee for the year ended 31t December 2016 receivable from Burford td, Moss' largest client, was 360,000. In addition Moss LLP provided tax advice worth 150,000. Moss LLP's total fee income for that year was 5,000,000. (4 marks) (i) Moss LLP has been approached by one of its audit clients Hamilton Ltd for help with submitting a tender for a large public sector contract. However, you are aware that your firm has already agreed to advise another client Stewart Ltd on its submission for the same contract (4 marks) (ii) Adele Woodstock an expert in Financial Technology has just been appointed a partner at Moss LLP. For the previous two years and since its inception she had been the finance director of Ant Bank an audit client of Moss Plc. 4 marks) (iv)The Financial Controller of Wootton Plc, an audit client for many years, has requested that the extemal audit team should not be changed from the previous year as they got on well with the clients' staff both professionally and socially (v) The finance director of Stanton Ltd has approached you requesting a second opinion on an auditor's report which its existing auditors are about to issue. This report will express an adverse opinion. The Finance Director states that the existing auditors are old fashioned and are being exceedingly cautious and in her opinion an unmodified report should be given (4 marks) Total 25 marks Question 1 Answer all parts of this question Section 1 of the FRC Ethical Standard that applies to the audit of financial statements require all firms except the very smallest to appoint an ethics partner, who will be a senior partner with a good deal of authority within the firm, and who will be available for consultation on ethical matters for engagement partners and other matters of judgement that arise Required (a) Explain the ethical fundamental principle of the duty of confidentiality outlining three circumstances when auditors are entitled to breach that duty (5 marks) (b) As the ethics partner in a large firm of Chartered Accountants, Moss LLP state the ethical issues involved and what action should be taken, if any, of the following matters have been brought to your attention: (i) The audit fee for the year ended 31t December 2016 receivable from Burford td, Moss' largest client, was 360,000. In addition Moss LLP provided tax advice worth 150,000. Moss LLP's total fee income for that year was 5,000,000. (4 marks) (i) Moss LLP has been approached by one of its audit clients Hamilton Ltd for help with submitting a tender for a large public sector contract. However, you are aware that your firm has already agreed to advise another client Stewart Ltd on its submission for the same contract (4 marks) (ii) Adele Woodstock an expert in Financial Technology has just been appointed a partner at Moss LLP. For the previous two years and since its inception she had been the finance director of Ant Bank an audit client of Moss Plc. 4 marks) (iv)The Financial Controller of Wootton Plc, an audit client for many years, has requested that the extemal audit team should not be changed from the previous year as they got on well with the clients' staff both professionally and socially (v) The finance director of Stanton Ltd has approached you requesting a second opinion on an auditor's report which its existing auditors are about to issue. This report will express an adverse opinion. The Finance Director states that the existing auditors are old fashioned and are being exceedingly cautious and in her opinion an unmodified report should be given (4 marks) Total 25 marks