Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Chapter 2, Problem 31OQ
To determine
Identify that the given statements are correct or not.
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You have recently been appointed as auditor to Johnson Plc; a company whoseshares are traded on the Stock Exchange. The Directors of Johnson Plc haverecommended that you perform the following services .(i) The statutory audit of the annual financial statements.(ii) Taxation services, and(iii) Consistency services in respect of the implementation of a new informationtechnology systemYour firm has not acted for Johnson Plc before but does act as auditor for one of themajor competitors.Required.(a) Identify and explain the professional and ethical issues that should have beenidentified by your firm in relation to the provision of the services outlined above,and describe the safeguards that should be in place in order to address theseissues
You have recently been appointed as auditor to Johnson Plc; a company whoseshares are traded on the Stock Exchange. The Directors of Johnson Plc haverecommended that you perform the following services .(i) The statutory audit of the annual financial statements.(ii) Taxation services, and(iii) Consistency services in respect of the implementation of a new informationtechnology systemYour firm has not acted for Johnson Plc before but does act as auditor for one of themajor competitors.Required.
(b) What are the fundamental principles of ethics? Briefly explain their meaning
You have recently been appointed as auditor to Johnson Plc; a company whoseshares are traded on the Stock Exchange. The Directors of Johnson Plc haverecommended that you perform the following services .(i) The statutory audit of the annual financial statements.(ii) Taxation services, and(iii) Consistency services in respect of the implementation of a new informationtechnology systemYour firm has not acted for Johnson Plc before but does act as auditor for one of themajor competitors.
(c) A client’s affairs should not be disclosed to third parties. However where a clienthas been guilty of an unlawful act, to whom should the auditor disclose this, andin what order ?
Chapter 2 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 9RQCh. 2 - Prob. 10RQ
Ch. 2 - Prob. 11RQCh. 2 - Prob. 12RQCh. 2 - Prob. 13RQCh. 2 - Prob. 14RQCh. 2 - Prob. 15RQCh. 2 - Prob. 16RQCh. 2 - Prob. 17RQCh. 2 - Prob. 18RQCh. 2 - Prob. 19RQCh. 2 - Prob. 20RQCh. 2 - Prob. 21RQCh. 2 - Prob. 22RQCh. 2 - Prob. 23RQCh. 2 - Prob. 24RQCh. 2 - Prob. 25QRACh. 2 - Prob. 26QRACh. 2 - Jane Lee, a director of a nonpublic corporation...Ch. 2 - Prob. 28QRACh. 2 - Prob. 29QRACh. 2 - Prob. 30AOQCh. 2 - Prob. 30BOQCh. 2 - Prob. 30COQCh. 2 - Prob. 30DOQCh. 2 - Prob. 30EOQCh. 2 - Prob. 30FOQCh. 2 - Prob. 30GOQCh. 2 - Prob. 30HOQCh. 2 - Prob. 30IOQCh. 2 - Prob. 30JOQCh. 2 - Prob. 30KOQCh. 2 - Prob. 30LOQCh. 2 - Prob. 31OQCh. 2 - Prob. 32OQCh. 2 - Prob. 33OQCh. 2 - Prob. 34OQCh. 2 - Prob. 35OQCh. 2 - Joe Rezzo, a college student majoring in...Ch. 2 - Prob. 37PCh. 2 - Hide-It (HI), a family-owned business based in...Ch. 2 - Prob. 39RDC
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- Purnama Sdn Bhd involve in event management business and provide services to private and government agency. The company is required to have annual audit under the provision of the Companies Act, 1965. The owner of the company Mr. Hassan has some bookkeeping experience and has personally prepared the company’s financial statements. He does not understand why such statement should be examined by an external auditor. REQUIRED: Discuss the audit objective of financial statement for Purnama Sdn Bhd.arrow_forwardYou have recently been appointed as auditor to Johnson Plc; a company whose shares are traded on the Stock Exchange. The Directors of Johnson Plc have recommended that you perform the following services . (i) The statutory audit of the annual financial statements. (ii) Taxation services, and (iii) Consistency services in respect of the implementation of a new information technology system Your firm has not acted for Johnson Plc before but does act as auditor for one of the major competitors. Required. (a) Identify and explain the professional and ethical issues that should have been identified by your firm in relation to the provision of the services outlined above, and describe the safeguards that should be in place in order to address these issues. (Include citations to support work). (b) What are the fundamental principles of ethics? Briefly explain their meaning (Include citations to support work). (c) A client’s affairs should not be disclosed to third parties. However where a…arrow_forwardyou have recently been appointed as auditor to Johnson Plc; a company whose shares are traded on the Stock Exchange. The Directors of Johnson Plc have recommended that you perform the following services . (i) The statutory audit of the annual financial statements. (ii) Taxation services, and (iii) Consistency services in respect of the implementation of a new information technology system Your firm has not acted for Johnson Plc before but does act as auditor for one of the major competitors. (a) Identify and explain the professional and ethical issues that should have been identified by your firm in relation to the provision of the services outlined above, and describe the safeguards that should be in place in order to address these issues. (including Citations/references) (b) What are the fundamental principles of ethics? Briefly explain their meaning (including Citations/references) (c) A client’s affairs should not be disclosed to third parties. However where a client has been…arrow_forward
- Select the appropriate provisions of the Sarbanes-Oxley Act (SOX) for each of the following descriptions. Descriptions Major Provisions of the Sarbanes-Oxley Act a. Executives must personally certify the company's financial statements. b. Audit firm cannot provide a variety of other services to its client, such as investment advising. c. PCAOB establishes standards related to the preparation of audited financial reports. d. Lead audit partners are required to change every five years. e. Management must document the effectiveness of procedures that could affect financial reporting.arrow_forwardYour firm has many clients and many audits reporting obligations. The audits of most clients result in an unmodified opinion. The following draft represents the report that you contemplate for your nonissues. Independent Auditor's Report To: The Board of Directors We have [1] the accompanying financial statements of X Company, which comprise the balance sheets as of December 31, 20X1, and 20X0, and the related statements of income, changes in stockholders' equity, and [2] for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements [3] is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,…arrow_forwardPurnama Sdn Bhd involve in event management business and provide services to private and government agency. The company is required to have annual audit under the provision of the Companies Act, 1965. The owner of the company Mr. Hassan has some bookkeeping experience and has personally prepared the company’s financial statements. He does not understand why such statement should be examined by an external auditor. Explain five (5) ways in which an independent audit beneficial to Purnama Sdn Bhd.arrow_forward
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