CASE STUDY: STEVIE GEE LTD

The client: Stevie Gee Limited Steve Andrews (CEO) and Giana Griffin (CFO) founded Stevie Gee Ltd, an Information Technology services company, in 2006 and is headquartered in Brisbane, Queensland. Stevie Gee Ltd specialises in providing information technology (IT) support to an array of national customers, who pay a monthly retainer plus fees based on support services demand. The business has grown from the initial two founders to a staff of 30 IT technicians in addition to the other administrative and accounting staff. The financial year of Stevie Gee Ltd ends on 31 December each year.

The external auditors: Ashley & Partners (Ashley)

Ashley & Partners (Ashley) is a relatively small audit firm providing audit, advisory and taxation services to several mostly Brisbane-based clients. The audit firm has developed a reputation for their insights and high-quality audits which builds trust in financial markets and business. In particular, many of their clients are in the Information Technology sector. To ensure that the firm continues to provide high quality audits, all staff are required to undertake, at a minimum, annual training on current and emerging audit considerations. For instance, all members of the audit firm are required to know and understand the current audit guidance for remote working arrangements that have become increasingly common over the past three years. These are particularly relevant to the IT industry, and given Ashleys prior experience in this sector, the audit firm has been highly regarded by peer audit firms. In fact, one of the senior partners, John Michael (a Griffith University alumni!), was jointly invited by CAANZ and CPA to provide written guidance on Emerging Auditing Considerations for Remote Working Arrangements in the Post-COVID era: Insights from the IT sector. Stevie Gee Ltd has been a client of Ashley for the past 9 years. Mr Rob Ashley, the founding partner of Ashley & Partners, has always been involved with Stevie Gee Ltd, first as the Engagement Partner and later as a tax advisor. John Michael has served as the engagement partner on Stevie Gee Ltd audits since 2015. Patience Scott was the audit manager on the FY2021 Stevie Gee Ltd audit engagement and is likely to be appointed audit manager again if they decide to proceed with the FY2022 audit. Nic Lauder, a trainee accountant, joined the audit firm in January 2022 after graduating with his business degree. Having heard a lot about Rob Ashley from his Auditing lecturer, he is really excited about the opportunity to work at Ashley & Partners. One of Nics best mates, 3 Joel Andrews, is an IT technician at Stevie Gees. They originally met three years ago through a hiking Meetup group, and often go hiking and mountain biking together. Being the nephew of Steve Andrews, Joel secured part-time administrative and bookkeeping work for Nic at Stevie Gee Ltd. Nic started working at Stevie Gee whilst still at university and over the summer holidays, assisting mainly with processing receipts from credit customers and performing bank reconciliations. Nic ceased working for Stevie Gee Ltd when he was accepted into Ashley for his traineeship. By this time, Joel had also taken up a position at Commonwealth Bank as an IT technician to broaden his experience. Because Joel was no longer working at Stevie Gee Ltd, Nic decided that it was not necessary to mention his friendship with Joel. He was also a little concerned that the audit firm might be a bit pedantic and he did not want to jeopardise his chance to audit Stevie Gee. He reasoned that his previous work experience at Stevie Gee would provide a valuable perspective to better understand the application of audit techniques.

REQUIRED: The audit firm is considering whether it is appropriate to continue with Stevie Gee Ltd as a client. You are required to evaluate the professional conduct of Ashley & Partners and its members in terms of APES 110 Code of Ethics for Professional Accountants, and prepare a report addressed to the Audit Partners, discussing your evaluation. You are also required to provide a recommendation as to the client continuance decision. The report should specifically include the following:

1. An executive summary that outlines the purpose of the report, summary of the evaluation of professional conduct and recommendations made.