a) State three factors that have affected the incidence of lawsuits against auditing firms in recent years.                                                                                                               b)   b) Distinguish between business failure and audit risk. Why is business failure a concern to auditors?                                                                                                                  c)      c) Discuss why many auditing firms have willingly settled lawsuits out of court. What are the implications to the profession?

In assessing whether to accept a client for an audit engagement, an auditor should consider the:   Select one:a. Political consistency of the country. b. Auditor’s engagement risk.c. The social and cultural factors of society in which the business operates. d. None of the above.

Statement 1: An entity wherein the client has a nominal interest, is considered a related. Statement 2: lf the auditor performed analytical procedures in the audit completion phase and discovers a previously unrecognized risk, the auditor shall issue an adverse opinion. Statement 3: One of the management's responsibilities regarding related party transactions is to properly account for and disclose such transactions.  A. Only one statement is correct  B. Only two statements are correct C. All statements are correct  D. All statements are incorrect

Question 1 For each of the following scenarios, indicate whether in your opinion it is a violation of the HKICPA Code of Ethics. Specifically, for each scenario, choose one of the following options: (1) not likely to be a violation; (2) likely to be aviolation; or (3)clearly a violation. For each scenario, clearly explain your reasoning. 1.→Tong and Tong CPAS recently completed the audit of the Michaels Corporation and- issued an unqualified opinion on the financial statements. Subsequent to the issuance of the financial statem ents and auditor'sreport, the Securities and Futures Commission: (SFC) initiated an investigation into possible illegal acts engaged in by Michaels Corporation, andhas requesteda copy of all the auditing documentation prepared by: Tong and Tong. Michaels Corporation has contacted Tong and Tong and threatenedto: take legal action against the audit firm if the auditors provide the auditing documentation to the SFC. Michaelsmaintains that the information is…

QUESTION 1 Registered auditors have skills and knowledge to perform their functions and they should be completely honest in performing their functions. The following actions taken by registered auditors are examples of non-compliance with one or more of the fundamental principles. Required: Identify with explanations which of the fundamental principles belonging to the SAICA Code of Professional Conduct have not been complied with in each of the situations described below: a) Randy Rice the registered auditor in charge of the Perry Sauce (Pty) Ltd audit, made racist comments concerning the clients staff during an audit planning session. b) Jerry Jan the registered auditor in charge of the audit of Dribble Drabble (Pty) Ltd, charged the client a fee for audit procedures which he knew had not actually been carried out. c) Tolly Ted a registered auditor, arranged with some of his clients to pay the fees which he charged for his services in cash. Any client agreeing to do so was not…

A5

Impact of Changing Rules. Many companies outsource their internal audit function to CPA firms.Required:a. What benefits might be gained from having a CPA firm provide its internal audit services?b. What benefits might be gained from having an in-house internal audit department?c. What concerns might arise from having a CPA firm provide its internal audit services?

3. Does a qualified opinion on management’s assessment of internal controls over the financial reporting system necessitate a qualified opinion on the financial statements? Please explain within 150 words. (To answer this question, please make sure you understand the terms “unqualified opinion” and “qualified opinion” in auditing.

What are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart iswriting a report for his audit partner based on these results and will be attending a meetingtomorrow with the partner and representatives of the company to discuss them. The issue will bewhether the financial report should be amended, or additional notes included for thesesubsequent events.Many of the items are not material and Stewart will recommend that no action be taken withrespect to these. However, there are several items that Stewart believes are material and shouldbe discussed at the meeting. These are as follows.(a) The board is planning to issue shares in a private placement on 15 August. (b) The share issue is to fund the purchase of a 60 per cent stake in another company. Thenegotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August. (c) A writ was…