Stephen is a member of the investigation committee of a professional accounting body which has ethical...
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Stephen is a member of the investigation committee of a professional accounting body which has ethical rules similar to those of the Hong Kong Institute of Certified Public Accountants. As such a member, he has to advise professional accountants on ethical issues and to analyze cases of complaints against professional accountants for misconduct. Below are four cases that need decision. Member R Member R has been in charge of auditing client J for ten years. He is very familiar with the client's operation and the industry in which J operates. He becomes a good friend of the CEO of X due to the long engagement. The governing body of R's firm considers to replace R with R2 under the new rotation policy but hesitates to do so because R2 needs to learn things anew.. Member S Member S is the auditor of client K for several years. His audit team recommended Y to upgrade the accounting information system (AIS) last year. The CEO of K considers that S could also help in providing the AIS service because S has expertise in the area. The IT team of S finished upgrading K's AIS before audit work is completed. 2 Member T Company L is a large company, specializing in road work. Its auditor has just resigned without matters of disagreement. The CFO of L proposes to hire the audit firm of member T who is a partner. Both L and T hire advertising company A for preparing promotional materials and other image-building services. Member U Member U is the auditor of client M. He also provides tax services for M. The tax team works independently of the audit team. A new recruit of the tax team is a close relative of the CFO of M. Therefore, U reallocates the new recruit to other clients. Required: Discuss whether the above members have violated the ethical standards of the professional accounting body to which Stephen is a member of the investigation committee. Stephen is a member of the investigation committee of a professional accounting body which has ethical rules similar to those of the Hong Kong Institute of Certified Public Accountants. As such a member, he has to advise professional accountants on ethical issues and to analyze cases of complaints against professional accountants for misconduct. Below are four cases that need decision. Member R Member R has been in charge of auditing client J for ten years. He is very familiar with the client's operation and the industry in which J operates. He becomes a good friend of the CEO of X due to the long engagement. The governing body of R's firm considers to replace R with R2 under the new rotation policy but hesitates to do so because R2 needs to learn things anew.. Member S Member S is the auditor of client K for several years. His audit team recommended Y to upgrade the accounting information system (AIS) last year. The CEO of K considers that S could also help in providing the AIS service because S has expertise in the area. The IT team of S finished upgrading K's AIS before audit work is completed. 2 Member T Company L is a large company, specializing in road work. Its auditor has just resigned without matters of disagreement. The CFO of L proposes to hire the audit firm of member T who is a partner. Both L and T hire advertising company A for preparing promotional materials and other image-building services. Member U Member U is the auditor of client M. He also provides tax services for M. The tax team works independently of the audit team. A new recruit of the tax team is a close relative of the CFO of M. Therefore, U reallocates the new recruit to other clients. Required: Discuss whether the above members have violated the ethical standards of the professional accounting body to which Stephen is a member of the investigation committee.
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Member R Not in violation Firm is in violation because ... View the full answer
Related Book For
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
Posted Date:
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