Sue, Liean and Ray have been good friends since their collegeyears. They were partners...

50.1K

Verified Solution

Question

Accounting

Sue, Liean and Ray have been good friends since their collegeyears. They were partners in a public accounting firm, Sue, Liean& Co (SLC) since 2005. Hakim Enterprise Sdn Bhd (HESB) is oneof SLC's clients. SLC has been HESB's external auditors for thepast three years. Recently, HESB is facing dificulties incollecting overdue debts from their customers. As a result, SLC'slast year audit fees have been outstanding for the last 6 months.HESB has given an intention to continue appointing SLC as theextenal auditor for the current year audit. Ray is the senior incharge of the audit of the financial statements of Aidil MajuBerhad (AMB) for the year ending 31 December 2013. AMB's CEO, Mr.Ikhwan, has just sent Sue an email to advise Sue that Ray has beenshortlisted for the position of Finance Director. Sue were notpreviously aware that Ray had applied for the position. Inaddition, Sue was also being informed by one of the managers whoreviewed AMB's audit that Ray and his family has been given a freeworld tour trip by Mr. Ikhwan. Kerry Enterprise Sdn Bhd (KESB) anaudit client, is threatening to sue SLC in respect of audit feescharged for the year ended 31 December 2012. KESB is alleging thatSLC billed the full rate on air fares for audit staff even afterobtaining substantial discounts for the fares.
Question:
a)Identify and discuss the ethical and other professional issuesrelating to the above mentioned matter.
b) Provide appropriate safeguards for the ethical issues.

Answer & Explanation Solved by verified expert

4.4 Ratings (886 Votes)

The auditor is subject to relevant ethical requirement including those pertaining to independence relating to the financial statment audit engagements The International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants IESBA Code states the ethical requirements related to an audit of financial statements In the given question below mentioned issues have been observed Fees overdue Fact of the case SLC has been the external auditor of HESB for three See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingSue, Liean and Ray have been good friends since their collegeyears. They were partners in...Sue, Liean and Ray have been good friends since their collegeyears. They were partners in a public accounting firm, Sue, Liean& Co (SLC) since 2005. Hakim Enterprise Sdn Bhd (HESB) is oneof SLC's clients. SLC has been HESB's external auditors for thepast three years. Recently, HESB is facing dificulties incollecting overdue debts from their customers. As a result, SLC'slast year audit fees have been outstanding for the last 6 months.HESB has given an intention to continue appointing SLC as theextenal auditor for the current year audit. Ray is the senior incharge of the audit of the financial statements of Aidil MajuBerhad (AMB) for the year ending 31 December 2013. AMB's CEO, Mr.Ikhwan, has just sent Sue an email to advise Sue that Ray has beenshortlisted for the position of Finance Director. Sue were notpreviously aware that Ray had applied for the position. Inaddition, Sue was also being informed by one of the managers whoreviewed AMB's audit that Ray and his family has been given a freeworld tour trip by Mr. Ikhwan. Kerry Enterprise Sdn Bhd (KESB) anaudit client, is threatening to sue SLC in respect of audit feescharged for the year ended 31 December 2012. KESB is alleging thatSLC billed the full rate on air fares for audit staff even afterobtaining substantial discounts for the fares.Question:a)Identify and discuss the ethical and other professional issuesrelating to the above mentioned matter.b) Provide appropriate safeguards for the ethical issues.