Below are three unrelated scenarios:a) Jeremy Waru, an audit partner, provides inaccurate advice toa...Below...

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Accounting

Below are three unrelated scenarios:
a) Jeremy Waru, an audit partner, provides inaccurate advice toa client on their reporting requirements because he is not up todate with recent changes to accounting standards.
b) Mike Tan, an audit analyst, tells a tennis club friend not tobuy a new software package for her firm. Mike confides that OrexLtd, one of his clients is developing a rival product that is farsuperior and will be launched in a few months at a much lowerprice.
c) Fiona Black, an audit partner, decides to accept the audit ofPlankton Ltd, an FMC reporting entity. Although she has theknowledge and experience required, she is not a licenced auditor.She is also overheard unfairly criticising the work of the outgoingauditor while in discussions with Plankton Ltd staff about takingover the audit.
Required
1,: For each separate scenario a) to c) above identify andexplain which one fundamental ethical principle is most likely tobe compromised, as well as how it is likely to be compromised.
2. Briefly explain why independence is important in assuranceengagements.
3. Identify and briefly explain one threat to independence andprovide an example to illustrate your explanation. [

Answer & Explanation Solved by verified expert

4.3 Ratings (632 Votes)

1Scenario A The ethical standard which is compromised in this case is Competency Being Competent is to be updated to the recent changes in the environment and provide the client with best services possible Here competence principle is compromised because he is likely to give inaccurate advice without updating to recent changes Scenario B The See Answer

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Transcribed Image Text

In: AccountingBelow are three unrelated scenarios:a) Jeremy Waru, an audit partner, provides inaccurate advice toa...Below are three unrelated scenarios:a) Jeremy Waru, an audit partner, provides inaccurate advice toa client on their reporting requirements because he is not up todate with recent changes to accounting standards.b) Mike Tan, an audit analyst, tells a tennis club friend not tobuy a new software package for her firm. Mike confides that OrexLtd, one of his clients is developing a rival product that is farsuperior and will be launched in a few months at a much lowerprice.c) Fiona Black, an audit partner, decides to accept the audit ofPlankton Ltd, an FMC reporting entity. Although she has theknowledge and experience required, she is not a licenced auditor.She is also overheard unfairly criticising the work of the outgoingauditor while in discussions with Plankton Ltd staff about takingover the audit.Required1,: For each separate scenario a) to c) above identify andexplain which one fundamental ethical principle is most likely tobe compromised, as well as how it is likely to be compromised.2. Briefly explain why independence is important in assuranceengagements.3. Identify and briefly explain one threat to independence andprovide an example to illustrate your explanation. [