QUESTION 1(24 marks)The following situations involve potential violation of the generalethical principles as outlined...QUESTION...

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Accounting

QUESTION 1
The following situations involve potential violation of the generalethical principles as outlined in APES 110 .You are asked to advisewhether they involve a violation or not of the ethicalprinciples
and if there is a violation explain which ethical principle hasbeen violated and the reason(s)why it is or isn’t a violation .
a) Jenny Wang is the Senior Auditor on the audit ofPanania Cars Pty Ltd , a large car dealership,a which sells new andused cars .The Sales Manager advises Jenny Wang that there is asale to long established customers of the car dealership and sinceshe has audited the company for the past six years she can purchasethe new cars at a twenty percent discount on the discounted salesprice.
b)Katrina Wearne is the auditor on the audit of LancomCosmetics .Katrina is auditing the company during November andDecember 2018 and has been given a Christmas gift of $350 cosmeticsfrom the company .
c)A client requests the assistance of D.Marron ,achartered accountant ,in the installation of a computer system formaintaining production and inventory records .As Marron has noexperience in this type of work he engages a computerconsultant who he has confidence in to carry out the review.Due tothe highly technical nature of the work Marron is not able toreview the computer consultant’s work and once the client hasagreed Marron gives the go ahead for the installation of thecomputer system.
d)Six small chartered accounting firms have beentaking part in a quality assurance working paper reviewprogram.Under this review each firm reviews the working papers ofanother firm and the reviewer discusses the strengths andweaknesses of the audit with the auditor from the other firm.
e)Bill Holland , a chartered accountant ,sets up acasualty and fire insurance agency to complement
his auditing and tax services .He doesn’t use his own name onanything relating to insurance agency
and has a highly competent manager,Simone Taylor, who runs it.Holland often requests that Taylor review the adequacy of theclient’s insurance with management if the client seems underinsured.
f)Emma Lawrence , a public accountant in a smallcountry town,provides tax services,management advisory services,bookkeeping services and conducts audits for the same client.Since the firm is small the same person often carries out all theservices.

Answer & Explanation Solved by verified expert

4.1 Ratings (551 Votes)

aPurchasing goods at discounted price by auditor is not violation of ethical principles if it is in ordinary course of businessIn this case auditor gets the discount because he is long established dealer with Company thus there is no violation of ethical See Answer

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In: AccountingQUESTION 1(24 marks)The following situations involve potential violation of the generalethical principles as outlined...QUESTION 1The following situations involve potential violation of the generalethical principles as outlined in APES 110 .You are asked to advisewhether they involve a violation or not of the ethicalprinciples and if there is a violation explain which ethical principle hasbeen violated and the reason(s)why it is or isn’t a violation .a) Jenny Wang is the Senior Auditor on the audit ofPanania Cars Pty Ltd , a large car dealership,a which sells new andused cars .The Sales Manager advises Jenny Wang that there is asale to long established customers of the car dealership and sinceshe has audited the company for the past six years she can purchasethe new cars at a twenty percent discount on the discounted salesprice.b)Katrina Wearne is the auditor on the audit of LancomCosmetics .Katrina is auditing the company during November andDecember 2018 and has been given a Christmas gift of $350 cosmeticsfrom the company .c)A client requests the assistance of D.Marron ,achartered accountant ,in the installation of a computer system formaintaining production and inventory records .As Marron has noexperience in this type of work he engages a computerconsultant who he has confidence in to carry out the review.Due tothe highly technical nature of the work Marron is not able toreview the computer consultant’s work and once the client hasagreed Marron gives the go ahead for the installation of thecomputer system.d)Six small chartered accounting firms have beentaking part in a quality assurance working paper reviewprogram.Under this review each firm reviews the working papers ofanother firm and the reviewer discusses the strengths andweaknesses of the audit with the auditor from the other firm.e)Bill Holland , a chartered accountant ,sets up acasualty and fire insurance agency to complement his auditing and tax services .He doesn’t use his own name onanything relating to insurance agency and has a highly competent manager,Simone Taylor, who runs it.Holland often requests that Taylor review the adequacy of theclient’s insurance with management if the client seems underinsured.f)Emma Lawrence , a public accountant in a smallcountry town,provides tax services,management advisory services,bookkeeping services and conducts audits for the same client.Since the firm is small the same person often carries out all theservices.