Simon is recently qualified as a professional accountant after completing the practical requirements with Lau, Ho...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Simon is recently qualified as a professional accountant after completing the practical requirements with Lau, Ho & Co. Certified Public Accountants (Lau). Soon afterwards, Simon applied for and secured a position with a Lau audit client, which is called Chan Cheung Kee Construction and Investment Co. (CCK). CCK is a Hong Kong-based company listed on the Stock Exchange of Hong Kong. Simon has never worked on the audit of CCK before. During his first month at his new job, Simon becomes aware of the fact that a Lau's recommendation was partially or entirely responsible for him having been chosen for his job. Lau's advice is often sought by CCK's senior management. wiel CCK requested Lau to provide some audit working papers relating to CCK's systems and operating procedures so that Simon can use these documents to speed up his training on CCK's system and operating procedures. Lau agreed and subsequently asked a junior audit staff to duplicate extracts from last year's audit working papers. One of the working papers extracts, which probably should not have been photocopied, indicates that Lau charges CCK its audit fee based on a formula that is calculated as a varying percentage, depending on how successful CCK is in its public offerings during the year. Simon does not immediately react by asking any potentially embarrassing questions. However, Simon is concerned with the apparent ethical violation. Simon is also uncertain about the ethical responsibilities that he has to both past and present employers, and to the professional bodies. Discussion a. Describe the apparent ethical violation. b. Describe the ethical responsibilities Simon has. c. Discuss the course of action that Simon should take. Simon is recently qualified as a professional accountant after completing the practical requirements with Lau, Ho & Co. Certified Public Accountants (Lau). Soon afterwards, Simon applied for and secured a position with a Lau audit client, which is called Chan Cheung Kee Construction and Investment Co. (CCK). CCK is a Hong Kong-based company listed on the Stock Exchange of Hong Kong. Simon has never worked on the audit of CCK before. During his first month at his new job, Simon becomes aware of the fact that a Lau's recommendation was partially or entirely responsible for him having been chosen for his job. Lau's advice is often sought by CCK's senior management. wiel CCK requested Lau to provide some audit working papers relating to CCK's systems and operating procedures so that Simon can use these documents to speed up his training on CCK's system and operating procedures. Lau agreed and subsequently asked a junior audit staff to duplicate extracts from last year's audit working papers. One of the working papers extracts, which probably should not have been photocopied, indicates that Lau charges CCK its audit fee based on a formula that is calculated as a varying percentage, depending on how successful CCK is in its public offerings during the year. Simon does not immediately react by asking any potentially embarrassing questions. However, Simon is concerned with the apparent ethical violation. Simon is also uncertain about the ethical responsibilities that he has to both past and present employers, and to the professional bodies. Discussion a. Describe the apparent ethical violation. b. Describe the ethical responsibilities Simon has. c. Discuss the course of action that Simon should take.
Expert Answer:
Answer rating: 100% (QA)
Apparent Ethical Violation The apparent ethical violation here is the potential conflict of interest and breach of independence Laus recommendation le... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Discuss with your classmates how the material you are reading and learning about regarding mortgages and taxes might help you in your daily life and/or in the field in which you are seeking...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
After the Internet investment bubble burst, the original concept of easyInternetcaf? (eIc) was just not working out. The management decided to retrench, closing and downsizing some of the original...
-
Solomon Company's cost and production data for two recent months included the following: March April Production (units) 400 600 $2,400 $ $2,400 $1,200 Rent Utilities 800 Required a. Separately...
-
What are the drivers behind the increased value of the U.S. dollar? Is it something that Apple can control? Explain your answer.
-
Give production rules in extended Backus-Naur form for identifiers in the C programming language (see Exercise 33).
-
What is eco-efficiency? How is it measured? Why is it measured? Where is it reported?
-
Harrelson Inc. currently has $750,000 in accounts receivable, and its days sales outstanding (DSO) is 55 days. It wants to reduce its DSO to 35 days by pressuring more of its customers to pay their...
-
Flint Company purchased a delivery truck for $29,000 on January 1, 2022. The truck has an expected salvage value of $2,740, and is expected to be driven 101,000 miles over its estimated useful life...
-
XYZ Manufacturing would like to purchase a machine for its current operations. XYZ would like to know the maximum price it should pay for that machine. That is, how high must the price be for the...
-
Consider two individuals. Antoine and Belinda, with marginal benefit functions respectively given by: MBA = 10 Q and MBB = 5 Q, where Q represents the amount of a (pure) public good. Suppose the good...
-
Anderson Corp. has the following information: Beginning Ending Inventory Inventory (1/1) (12/31) Direct Materials Inventory $20,000 $30,000 Work in Process Inventory $16,000 $18,000 Finished Goods...
-
B 15 16 1) Useful life of the equipment (years) 17 2) New equipment cost* 18 3) Equipment ship & install costs* C 19 4) Related equipment start-up costs* 20 5) Inventory increase. 21 6) Accounts...
-
Using the Information below of Opportunities and threats. , develop an EFE matrix using five (5) opportunities and five (5) threats. Discuss how you developed the EFE matrix and the outcome....
-
Your audit firm was appointed as auditors of Molteno (Pty) Ltd (following the resignation of the previous auditor) in the current year. Permission was obtained to consult the previous auditors. The...
-
Random walks Consider a random walk on the integers, with transition probs. Pjiji = p Poj- = 9=1-p a) Gambler's ruin: For p-4/3, use a computer to estimate PET 10,000], ie, the probability that you...
-
Provided in the following data file is the recent excess returns for the market portfolio and for 26 companies-one for every letter of the alphabet. Analyze PG stock using the CAPM style of analysis....
-
Why do CPA firms sometimes use a combination of positive and negative confirmations on the same audit?
-
Cornelius Vander Starr wanted to see the world. In 1918, the 26-year-old Californian emptied his bank account to purchase a one-way ticket to the Far East on a steamship. After "bumming around" Japan...
-
Financial crime is a growth industry worldwide. The U.S. Department of the Treasury estimates that the proceeds from extortion, healthcare fraud, identity theft, insider trading, the trafficking of...
-
After answering her cell phone, Kayleigh Caudell cradled it between her right ear and shoulder as she continued to scroll through a large electronic file searching for a client document. "Hello,...
-
The steps, in order, in the decision-making process are (a) identify issue, analyse information, gather information, identify decision-making tool, evaluate results; make a decision. (b) gather...
-
Which of the following is not a typical accountants role? (a) A financial controller. (b) A marketing manager. (c) An auditor. (d) All of the above are roles of an accountant.
-
Describe the financial reporting environment. Indicate whether each statement is true or false. (a) Accounting standards are set by the Financial Reporting Council. (b) The ASX Listing Rules are only...
Study smarter with the SolutionInn App