Question 2 (1 point) Saved Simon Jacobs CA is an audit partner at GSG Accountants. One of GSG Accountants' audit clients is Xara Limited (Xara), a clothing retailer. Simon has been Xara's auditor for the past four years. Previously unknown to Simon, his grandmother who recently passed away - had bought Xara shares cumulatively over the last five years, resulting in a total ownership of 20% of Xara's total shareholding. In accordance with her will, Simon has inherited his grandmother's shares in Xara. Simon has not revealed to his colleagues, nor Xara's management, of his total holding in Xara as he wants to honour his grandmother's memory. However, Simon is concerned that he may cause an independence issue if he continues to hold his shares in Xara. What is the key threat to the fundamental principles that Simon is facing, and what is the most appropriate safeguard to be applied, and/or action to eliminate the threat? Choose the best answer. Advocacy. Simon should be excluded from the audit engagement. Familiarity. Simon should resign as audit partner and GSG Accountants should not continue to have Xara as its client. Self-review. Another partner should shadow Simon as a partner and review all audit workpapers before Simon signs the auditor's report. Self-interest. Simon should sell all his shares in Xara. Question 3 (1 point) Saved Preeda is currently enrolled in the CA Program and has only two subjects of the CA Program left to complete. She also works in the business services division for a mid- tier accounting practice called TrueBlue Accountants. Preeda has been with the practice since she accepted a graduate position and hopes to have a long career there. Preeda has been working on an engagement at a client's office with a more senior accountant. Unfortunately, the senior accountant is currently on sick leave. Preeda is due to take study leave in two days to prepare for her exams. Her manager. Terence, has come to review progress, and is angry that the work is behind schedule. Terence insists that Preeda undertake a complicated reconciliation that the senior accountant has left incomplete. He demands that Preeda complete the reconciliation work before taking study leave. Preeda is worried. Two days is a very short timeframe, considering the complexity of the work. Preeda also believes she lacks sufficient experience to undertake the work independently and needs guidance to complete it properly. As Terence leaves, he stresses to Preeda that he is fully occupied with multiple current projects and is unavailable to offer the support she requires to complete the reconciliation work. He also mentions that the practice is busy and there are no staff available to help her on the engagement Preeda is concerned about the consequences of the practice failing to meet the level of quality expected for the work. Understandably, Preeda is feeling stressed about the situation, especially with the added pressure of upcoming exams. Preeda also feels intimidated by Terence and the current challenges at work, and she feels pressure to do whatever is necessary to complete the reconciliation work. What should Preeda do to resolve the conflict relating to completing the reconciliation work? Choose the best answer. Preeda should ask her father, who is a CA working in a different firm, how to complete the work Preeds should complete the work to the best of her ability and retain private diary notes of Terence's instructions in case Preeda is blared at a future date, for the work being completed incorrectly. Preeda should resign from the practice and join a firm that will provide better training and support Preeda should advise Terence of her lack of time, and experience, to complete the work Question 4 (1 point) Saved Jacinta CA is an audit partner in a large accounting firm. Jacinta's sister Susan, is also a CA. Susan is the finance director of a non-profit organisation, We Care for Animals, which looks after animals who have been abandoned. Each year, We Care for Animals receives large amounts of donations from the public and significant grant funding from the Federal Government. As a result of the grant funding. We Care for Animals is required to undergo an annual external audit on its financial report. This year, the Chief Financial Officer (CFO) of We Care for Animals has approached Jacinta to perform the annual audit. Jacinta is uncertain about whether she should accept the audit engagement and has spoken to Susan about her concerns. Which fundamental principle is most likely affected with respect to Jacinta accepting the audit engagement? Choose the best answer. Confidentiality O Integrity Objectivity O Professional competence and due care Question 5 (1 point) Saved Cho Yun CA owns CY Accounting Practice (CY Accounting). CY Accounting has employed around 50 staff of diverse backgrounds and fields of expertise. Cho has a double degree in Accounting and Science and maintained a High Distinction average when completing his degree from a prestigious university in New Zealand. Cho completed the CA Program and a Certificate of Public Practice (CPP) with good results, while maintaining an active social life. CY Accounting has a variety of clients and Cho enjoys getting to know each client personally. Once a month. Cho invites clients and their guests to lunch. At this month's lunch, one of Cho's clients has brought a guest - the chief financial officer (CFO) of a large, listed company, Broad Retail Limited (Broad Retail). The CFO has asked Cho to undertake a detailed review of Broad Retail's treasury function. Cho has never worked in, or consulted to a listed company's treasury department and has had no training in this area. However, Cho assimilates new knowledge quickly, and assumes a treasury function is very similar to an accounting function. Cho considers his ethical position. Broad Retail's engagement is very appealing, but Cho is concerned about whether he can accept it while maintaining compliance with the ethical principle of professional competence and due care. What safeguards could Cho apply to reduce the threat to professional competence and due care to an acceptable level? Choose the best answer. O Cho should not contact Broad Retail's CFO after the lunch and cancel any future engagements with them so Cho can avoid seeing the CFO again. Cho should attend a course on conducting a treasury review and ensure that CY Accounting has staff with the necessary competencies to conduct the engagement prior to accepting treasury review engagement. O Cho should accept the treasury review engagement and find short courses online for himself and CY Accounting's engagement team so they can use the correct terminology during the engagement. Cho should accept the treasury review engagement but reduce the fee charged to compensate for a lack of subject matter expertise by Cho and CY Accounting staff. Question 6 (1 point) Joel and Sophie studied together at university and are now both undertaking the CA Program. They meet weekly to study together, learn together and to provide each other with moral support. Sophie graduated from university with a double degree in accounting and information technology (IT). She currently works in the finance team for a medium- sized clothing manufacturer. Because of her double degree, Sophie is often approached with IT queries from other company employees and is often asked to assist with the company's IT problems. During one of their weekly study sessions, Sophie tells Joel that she has a dilemma. The previous week, Sophie's financial controller asked her to install a spyware software program onto all the computers in the office. The financial controller told Sophie that one the finance department's important functions is to ensure that the data in the office is protected. Sophie asked the financial controller if they had a licence for the software and whether the licence covered the number of machines that she was told to install the software on. The financial controller told her not to worry about licensing, as the cost to purchase the licences for all the machines could not be justified, based on the benefits the company would receive from using the software. Sophie tells Joel that she could easily install the software as it is a task that she practised regularly during her time at university Which fundamental principles may be breached by Sophie in this scenario? Choose the best answer. Objectivity, professional competence and due care and confidentiality Integrity, professional behaviour, and professional competence and due care Integrity, professional behaviour and confidentiality Integrity, objectivity and confidentiality