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CHAPTER 2 AUDITING STANDARDS AND PROFESSIONAL ETHICS

Exercise1. In the following scenarios, indicate which code of ethics auditors have
followed or violated?

1.1. After finishing the contract to provide accounting service for company X, accounting
firm AC has been asked by company X to audit that years financial statements.
Accounting firm AC declined.

1.2. Auditor has provided information about the audited client to a business partner who
works in the same industry of the client.

1.3. For having known the CFO of the audit client for a long time, Head of audit team
trusted the CFOs statement about an overdue debt to be repaid even though there is
persuasive evidence that suggests the difficult financial situation of this debtor.

1.4. During the audit period of a client, the chief auditor realizes he is not capable of
continuing the contract but fails to notify the head of the audit team about the matter.

Exercise 2. In each of the following situation, identify the possible threat to the
adherence to codes of ethics? Which code of ethics will this threat affect? How
should the audit firm/ auditor behave in response to these situations to eliminate or
reduce the threats to the acceptable level?

2.1. Dai Viet auditing company is reviewing the financial statements for Vitcom
company, a commerce business. Vitcom is planning to apply a new management software
system, and has requested Dai Viet to provide the relevant IT services for this system.

2.2. AAI auditing firm is preparing to audit the financial statements for ASA insurance
corporation. Audit assistant Nam is one of the team members. When he was still a
university student, Nam accepted a scholarship from ASA corp. and received a lot of help
from the ASAs CFO in many situations.

2.3. Hung is a government auditor and has been allocated as the chief auditor in the audit
of financial statements for BCC Project management Unit for planning and investment.
Hungs older brother is the CEO of An Sinh construction company limited. Most of An
Sinhs projects are from BCC.

2.4. Khang is a government auditor of Region III, who has been employed since 2014. In
2016, Khang has been allocated to be the chief auditor for the audit for the Final balance
of the investment fund in infrastructure of the BLL project for an apartment building for
low income earners. The project was started in 2010 and finished in 2015, by a house
planning and investment company called DB. Khang used to be the chief accounting for
DB since before 2010 until he became the government auditor.

2.5. Huong is a member of internal audit team of Tsoft software company, is responsible
for evaluating the proposal of building a new location or continue renting the office of
Tsoft. At the moment, the office Tsoft is renting is her parents house.

2.6. Lan is currently a member of internal audit team of Tmilk dairy company. She has
been asked to evaluate the success rate of introducing NFO a nutritious powdered milk
product for the elderly to the market. Before this, she used to work for the sales
department of the company and was in big dispute with the head of product development
division.

Exercise 3. After finishing the audit at TTC company - a software and IT business, to
show appreciation to auditors, the company manager decided to gift each auditor a 4GB
USB and invite all of them to a gala dinner with the best employees of the company for
the year. If you were one of the audit members, what would you do to follow the codes of
ethics?