Suggested Answers Assurance Nov-Dec 2018 4) How would you define auditing service, attestation service and assuranceservice” Give {wo examples from each of these services. anawer to the Question No.1 Auditing Auxiting 6 @ systemotic process of objectively obtaining and evaluating evidence regarding asvertc ‘about econorivc actions andl events to ascertain the degree of correspondence between the asserts 3 fectablished Criteria and communicating the results to interested users. The objective of an audit Jaiciol statements is to enable the auditor to express an opinion whether the financial staterr grepared, in all maternal respects, in accordance with an applicable financial reporting framewior Exninptes. 1, Loci Authority audits; 2. Bank audit Attestation Services Attestation involves an engagement resuiting in the issuance of @ regort on the subject mater oF assertion about the subject matter that is the responsibilty of anotrer party. Eainples: 1, Financial Forecast or Projection; 2. Compliance attestation Assurance Services An assurance engagement is one in which 2 practitioner expresses a conclusion designed to enhance t degree Of confidence of the intended users other than the responsible party about the outcome of t evaluation oF measurement o! a subject matter against criteria, Assurance services ere inderende* professional services that improve the quality of information, of its context, for decision makes Assurance services indude many areas of information, including non-financial areas. Examples: 1, Due diligence; 2. Fraud investigations b) Iman audit engagement, what are overall objectives of an auditor as per ISA 200? Answer to the Question No. (‘b): JSA 200 states that the overall objectives of the auditor are 1 Toobtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, theredy enabling the auditor to expre fn opinion on whether the financial statements ave prenaed, in all material respects, accordance with an applicable reporting framework; and 2 Torepott on the financial statements, and communicate 2s required by the ISAs, in accordas with the auditor's findings Jn order to do this, the auditor must: '* Comply wath relevant ethical requirements © Plan and perform the audit with professional skepticis~ © Exercise pnfessional judament Obtain audit evidence that is both sufficient and appropriate, from which reasonab conchusions may be drawn, on which the auditor's opinion is then based. 2) The IESBA code of ethics sets out rules as to how a new appointment should be accepted. Whatarethose proceduresthat auditors should abide by while accepting new dv : Page | 5‘Answer to the Question No. (2): AS guided by the IESBA code of ethics, auditors should abide by following procedures before accepting « new client ‘+ Determine whether acceptance would create any threat to compliance with the fundamental principles. ‘* Determine potential threats to integrity and professional behavior due to the predominant influential attitude of the owners, management etc. ‘Review if the client has/had involvement in illegal actvities ‘Evaluate the magnitude of the threats and apply suitable safeguard. If the threats are unlikely to be eliminated or reduced to an acceptable level, itis better declining to enter into the relationship, * Accept only those engagements which professional accountant in practice ks competent to perform. * Evaluate the significance of the threats and apply suitable safeguard to eliminate them orreduce to an acceptable level. Safeguards may include: Acquiring sufficient knowledge of the industries and related activities, Deploying adequate staff with due competencies ~ Using expert services wherever necessary 3) Write short notes on the following: (Professional skepticism (\))__ Professional judgment (ii) Audit strategy tw) Audit tan Answer to the Question No. (3): ) Professional skepticism An attitude of professional skepticism means the auditor makes a critical assessment, with a questioning mind, of the validity of audit evidence obtained and is alert to audit evidence that contradicts, or brings into question, the reliability of documents and responses to inquiries and other informacion obtained from management and those charged with govemance. (\) Professional judgment Professional judgment is the application of relevant training, knowledge and experience in ‘making informed decisions about the courses of action that are appropriate in the crcumstances of the audit engagement. (ili) Audit strategy ‘The formulation of the general strategy for the audit, which sets the scope, timing and direction of the audit and guides the development of the audit plan, (iv) Audit plan An auait plan is more detailed than the strategy and sets out the nature, timing and extent of audit procedures (Including risk assessment procedures) to be performed by engagement team members in ‘Order to obtain sufficient appropriate audit evidence: 4. (a) What do we mean by internal controls? What are two types of controls in a computerized environment? Cite example. Answer to the Question No. 4(a): ‘BSA 315 captioned with ‘Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement’ defines internal controls as follows: eee regard to reliability of financial reporting, effectiveness and efficiency of operations and compliance with Applicable laws and regulations. Itfolows that internal control is designed and implemented to address. vi Page | 6re sgentied business rsks that threaten the achievement of these objectives controls in a computerized environment ‘re internal controls in-@ computerized erivironment include both manual jt rtrrato te computer programs. Such manual and computer contra roses comprise Wo toes of conto. hese controls ate biely described below: _ General Controls: Gera conta ae polices a pr cedures, that relate to many applications and the effective function of application ' helping to ensure the continued proper operation of information. Examp! u ample indude: Convo over development of computer applications; prevention and detection of Snauthont cans aa tang ard documentation of program changes; controls to prevent wrong 09" files being used; controls to prevent unauthorized amendmer ols Prarie cee bey os ro authored amendments to data files and controls Application controls: ‘Applicaton controls are manual or automated procedures that apoty s 2 's that apoly to the processing of individbe apne tO ensure that transactions occurred are authorized and are completely and accurate'y recorded and processed. Examples may include: Control over input, processing, data files and output may be carried out by the IT personnel; Control over users of the system; a separate control group may be programmed into the appircation software. 4, (b) Describe an effective design of control mechanism applicable for payment system. ‘Answer to the Question No, 4 (b): The arrangements for controling payments have substantial bearing upon the size of the company and ts nature of business transaction with the volume of payments :nvolved. Considering these factors an effective design may cover following aspects: ‘Cheque or cash The cashier should generally not be concerned with keeping or wnting-up payments generally | books of account other than those recording payments, Nor should have access to, or be responsible for the custody of, secuntes or tie deecs |. belonging to the company. The person responsible for prepanng cheques should not himself be 2 | cheque signatory. Cheque signatories in turn should not be responsible *<~ | recording payments Cheque and bank transfer requisitions: ‘transfer payments Appropriate supporting documents (for example: Invoices, Purch: orders etc.) should accompany > Approval be accorded by aporopriate level of management | } Presentation of approved documents to cheques signatories (in c2s2_ | | of cheque) Instigation of transfer by approoriate staff | Authority to sign cheques: Signatories should not be assigned to approve cheque requisitions > Limitations on authority to specific amounts Signatories should be more thsn one to enable a cheque to be valid '2 | encashment Blank cheques must not be signed Signed cheques must be promptly dispatched Information with regards to parc cheques should be obtained from Payment must be promptly recorded. cash book, nominal and pay ment led \ Cash payments Fach expenditure must beauthonzes in accordance with, approval author Cancellation of vouchers must be ensured to deter duplication of payment Approved limit of cash payment must not exceed. ‘There must be approved Policies and rules with respect to cash advances a | _taemployees, 10Us and cheque cashing. vil Page' | control. Define '5) Information system is a critical component of internal ) information system that is relevant to financial reporting. What are the areas oy financial reporting, the auditor should be interested of? Answer to the Question No. (5): Information system relevant to financial reporting: ‘A component of internal control that indudes the financial reporting system and consists of the Drocedures and record established to inate, record, press and report entity transactions (25 wel ze ‘events and conditions) and to maintain accountability fr the related assets, abilities and equy. The auditor will be interested in: . = The classes of transactions that are significant to the entity's financial statements © Theprocedures by which transactions are initiated, recorded, processed, corrected and reported The related accounting records and supporting information = How the information system captures events other than transactions that are significant to the financial statements 3 = The process of preparing the financial statements This will typically involve the financial controller and/or director and the use of journals, whict auditors will be interested: in. The auditors will be interested in how this process links in with other internal controls and wheth at this point that controls are overridden or ignored (by use of journals for example). ) — Hesithy Pharmaceuticals Ltd. (HPL) has recently undergone an investigation of the ‘VAT Commissionerate with respect to errors in their invoicing system that impacts - on VAT deciaration. HPL appoints you being anassuraice provider to conduct a “ev =»: » the controls in place over invoicing to explore the areas of implement wits system, Answer to the Question No. (6): As an assurance provider, the minimum you have to revew the fellowing contr. __ preparation: + _Evidencethatthe salesinvoehas been agreedto thegoadsdispatch note:o confirmquantities sold Evidence that the sales imoice has been agreed tothe order to confirm the price of the coeds sais Evidence that the calaulaions on the invoice, induding the VAT calculation, have been checkes {na large computerized function, these checks are likely tobe caried out by @ computer program, so ‘could be checked by processing ‘dummy’ invoices through the system, some of which conta’ er: to ensure that the appropriate checks are being made. - see conta, vay ‘na less complex system, these checks might be made manually by 2 member of staff. In this case, he might be evidenced by sgnature or initials by that staff member. Thisis sometimes done by ug printed stamp on the copy ofthe invoice, such asthe folowing: [Quantity agreed to dispatch note? Sarr > ‘agreed to price ist? Saf checked cea Purpose does audit documentation serve? {work papers) is the record of procedures performed, relevant evidencefe A.sulficieet and appropriate record oF (Ive bale for Hye apeuraried (nerviler ® op subject matters and fe bvwience that the engaqernent war performed ms mcrorcharice watts ataricar la ae aime at egal and feguiatory requirement aust documentation serves a RUNDE OF AdKhtONal gutpHeeS, Inc Hud lve fullest assisting the engagement (eat to plan and perte Acsasting celevant members to ditect and sup Enabling the audit team to be accountal agncance for future audits 2 Enabling the conduct OF quality Control reviews and inspections Enabling the experienced auditor to conduct external inept egal regulatory oF other requirements he uit we Ue aut cr for its vaork, Retaining w verted of *t isin ccentinnce with nenhea b) Whatare the key matters that affect the form Answer to the Question No. 7(b): 1d content of documentation” Working papers shoul be sufficiently complete ard detailed 10 pro engagement. Typically following matters affect the form and conten © The size and complexity of the entity being audited «The nature of the audit procedures to be performed +The Wentified risks of material misstatement-and undeviying analy © The significance of the audit evidence obtained 1 erver al under stare Wf the dor umentater The nature and extent of exceptions Wlentified ‘The need to document a conclusion or the basis for a conclusion not readity determunane freer the _dzcumentation of the work performed or aut evidence obtained ‘+ The audit methodology and tools used 8. a) Appropriateness isthe indicator of quality and: reliability of the audit evidence. What are the generalized indicators that may help auditors to assess the quality of sud evidenrs” ‘Answer to the Question No. pgproprtneness (6 the measure of the qualty of relevance and relbiy Of the auas ove folowing generalized indicators may help in assessing the ‘quality and reiabilay of the audt erderce ‘External Auditeviden J fromexternal surcesis more reliable than that obtained from the entity rez": ‘Auditor _, Evidence obta directly by audtorsis more reliable than thatcbtamenncwetiycx V4 ete JEentity | Evidence obtained from vive entity records 15 mere reliable wien related orth ersten | operate effectively : - Written jEvidence in the form of documents (paper or Clectronie) oF written representations are more | {Fettable than oral representation {Griginals [Original dacuments are more reabe than photocopscs facies itor wat often use Information produced by tne entity when cnainwd ude ender e. athens this wil not always be a strong form of audit evidence When doing $0, the ISA requires that t ‘auditor ensures it is sufficiently reliable, including “obtaining audit rience atanA the accuracy # Seremantee of the information and evauating whether the infos ficiently preene Fee acantr’s purposes’ This may be ecleved by tesing covers in Wie tehahed m0 b) Define following terminologies commonly used in wudit engagement | Migstatement Error 4 Tolerable misstatement «Tolerable rate of deviation IK page| 9Aaromer te the Question NO. 8D): 2) Mestatannent Agiherence between the amount, Gassifcation, presentation, or disclosure of 2 reported finankiat ‘satement hem ane ee amouN Ciasecation, presentation, oF disclosure that is required for ‘De tem tolbe naccareiance with the applicable francal reporting framework, Misstatements can ese For era a head, 2 i epinmentional msstatement in Francia! statements, including the omission of an amount or a see ] Toleranie misstatement Toles misstatament’s monetary amount set bythe auctor in respect of which the auctor seeks so abenin an amprapriate level of assurance that the monetary amount set by the auditor is not aceeder Dy the actus misstatement in the ponuisbon ) Toverable rate af deviabon Taeable rate af deviaton 1S a rate of deviaton from prescribed internal control procedures set ty the autor nnespect of which the auditor seeks to obtain an appropriate level of assurance that ‘De rate of Gewanon set dy the auditor is nat eameeded by the actual rate of deviation in the UE 9) What do you understand by Financial Statement Assertions? Give a description of the assertons applicable to classes of transactions, account balances and disclosures tm prewide @ basis far designing and performing further audit procedures. Answer to the Question Wa. (3): Financial statement assertions. Represetat0rs by Management, Explicit or otherwise, that are erhadad & De Anacel Satemews Auct Assetins are the imphot or explict daims end cepresmcatons Made oy the Managen|AX response for th preparation of finsnoal statements ceganding the aroropmmeress.cf The varous OLNEY of Fnanoal Statements anc disosures. @Ssertons apolicanle D Glasses of Tarsactons, account balaanes and disclosures are descrded delow: Aseertions | Ocmurrence: Tansoctions and events that have been recorded have ocuned and abot pertain to te entity lasses of Complennness: all trencacions a events that should have been recorded have been Deesaction — reqyded. Accuracy: 2mounts and other cata relating to recorded transactions and s events have Deen recordad appropriately. Quboff: transactions and events have been recorded in the correct accounting period, Gassiication: transactions and events have been recorded in the proper accounts. | Assertion | Existence: assets, liabilities anc equity interests exist. - about —_—Rights and obligations: the entity halts ox controls the rights to assets, and libilt acount ae he ablgabions af the enty. *s ‘Balances —_Campleteness: ail assets, labilties and equity interests that should have been recorded | ‘have Deen recorded. Valuation and allocation: assets, sbilties, and equity interests are induded in the | | franca! Statements at appropriate amounts and any resulting valuation or allocation | a |_adustments are anpropriataly recorded. SSS ] tnattess have occurred and pertan to the entity. Completeness: all cisciosures that should hive been included in the fnancal statements have been induced. | | Gassification and understandabilty:.«6al information| ted os and na ; is appropriately presented | | Mecuracy and valuation: financial and other information are discs faity and at | | appropriate amounts. J x10. a) Brave & Co. Chartered Accountants, a partnership fit inted of Glittering Paints Bangladesh Itd. (GBPL) in its recently h eld AGM against fees of 8072.5 million. GBPL is one of the highly acclaimed listed companies in the country with shares being traded through both DSE and CSE. Mr. Brave, the Engagement Partner to the subject audit is a member to the City Golf Club (CGC) where among others the CEO of GBPL is a member too. Incidentally, both Mr. Brave and the said ceEO are members to the CGC Development Committee for many years. As a result, azart from their auditor-clent relationship, they have many ‘other common social How would you evaluate this situation keeping in view the ethi i How -tonal'accountants in practice? ping in view the ethical codes applicable to [Answer to the Question No. 10(a): In the given case, appointment has been made properly and the firm has apparently no problem to deal with such audit, provided they have adequate appropriate resources with due professional ‘competence. However, we see that the partner engaged to deal with this audit is very well known to the CEO of the company over many years, being member to a Golf Club. Moreover, both the CEO and the proposed engagement partner have been working together for the development work of Golf Club. So, itis natural that some level of reciprocal respect anid friendship has been built over time. Under this circumstance, there is an apparent threat to objectivity being 2 fundamental principle with few other threats such as femiliarity threats, threat to independence etc When there are situations that pose threat to objectivity as well as other principles, rn must be taken to avoid those threat or reduce respective threats to an acce the fim may change the engagement part keeping Mr. Brave completely away ‘rom the activity relat to the seid audit. In case the proposed engagement partner cannot be replaced, there must be a second partner as an independent reviewer. Care must be taken that this audit must pass through the designated review partner's clearance. Additionally, the matter of golf club membership may be disclosed to those charged with governance. b) Afinancial interest in a client constitutes a substantial self-interest threat. What are available safeguards to avoid such threat? Answer to the Question No. 10(b): Following are the safeguards available to avoid self-interest threat (financial Disposing of the interest what i th any of its critical staff member; > Removing the individual from the team, if required; > Keeping the client’s audit committee informed of the situation; > Using an independent partner to review work carried out, if necess2ry Assurance firm should have quality control procedures requiring staff to disclose relevant francial interests for themselves and immediate family members. They should also foster 3 +. qulture of voluntary disclosure of an ongoing basis so that any potential problems are identified ona timely basis. a. In the recent promulgation of the Code of Ethics applicable for professional 3 cluntants, Independence has been taken out of the list of fundamental principles! But it remains at its own merit as an ethical code for the professional accountants. What is your comment about its position beyond the list of fundamental principles? os Answer to the Question No. 11(2): ded as one of the fundamental principles. But later In the recent pastigdependence used to be regart In the recent pact Woe that fundamental pincpes are of @ general nate and are almost Ny applicable for tonts in profession as well as in the business. Independence, although 3 sophia for BO Esble forthe aceountants in business to demonstrate in ther activiy 2¢ "5 core ; x) “le. r Page | 11various unconraliabe factors On the pare iat al, due f0 contrary the degree of independence ,°" Sic, spi they can demonstrate © degree. On the Rremains at FEQuin pgscmng OR cee is highest audit engagement, ‘engagements nclesbenggenercby nature andevenyanpican. Censderratherstyanground fdanenal Pr, independence. pase has been 95, both rou of aomurtants have Jon keeping it separate rom the fundamental principles, ee Chartered Acountants in publi practice can accept contingeny b. page east teas 5 ‘to ethical codes applicable @ Members of fees and referral ~ E the ICAB, Answer to the Question No. 11(b): estesing ito negotiations regarding professonal sevices, a professional accountant in pubic ee ee appropriate A seinterest threat to profestions Conptac an ue cre € cree fhe fe quted soon tat R may be diffu to Perform the a ae with applicable technical and professonal standards for that orice Wiese fan he atove ctatns tha series teats cata nepobiatng/acceptin, fees against professional services of the professional accountants in public practice. Therefore, we Aeed to be 2s Gru while aceptnglnegotatng any fees or chaes servces to be received against professions| Sotmngent fees are fees calculated on a predetermined bass rating to the outcome of a transaction ne result ofthe services performed by the firm. They may ceate a self-interest threat to objectivity Sy AAS Bre ans ested as profesional misc. So, we See akougy TESBA does not Soph tae eaa acounants fo acept contingent ees ICAB by reference te the Bye-La: =2pplcahile to its members debars ‘accepting Such fee, Tegan 2 eal fee or commision rating to ie ot fom tind Party may create 3 ap wd oases acddhecare Sexing t otcan, fir eying and receiving referal fees of concern, a par aera Ks Concern, Therefore, if at all profess Ze Sf ‘Sfeece tthe cue of ethics aswel st the see oft ae remain careful by “The End--—. xi * Page | 12a Suggested Anggesay 2 ral yous ‘Assurance mee Fok Ne one 91813 Question N (a) The opinion given in an assurance engagement depends on what type of engagement it ss € appropriate examples of opinion given in different types of assurance ae — (b) Before accepting an engagement, the audit firm wil consider whether the client is likely to be b oe low risk othe firm in terra of being able to draw an approprisie assurance opaniun, What + the primary indications of low and high nsk clients” : — (c)_ Here are some extracts of financial statements of ecently acce audit chet 2017 2016 Tk. “000 k. “000 Revenue 1.566.088 950.339 Cost of sales 1.237.231 737.700 Gross profit 328,857 192,637 Salaries and wages 141.984 185,664 Other administrative costs 10,988 9.939 Audit fee 5,400 5.35 Bank charges 64 3 Other finance costs 2 - Advertsing 276 465 ‘You are required to identify three areas which analysical procedures may suggest as risky and will require special attention. 6 ‘Amser tothe Question, No, La) ‘Types of assurance engagement The framework identifies two types of assurance e1 «Reasonable assurance engagement : A high. but rot absolute, level of assurance and ‘e Limited assurance engagement: A lower level of assurance gement, “The types of opinion given in each engagement are stated below «Positive opinion: A practitioner is secking evidence 10 conclude whether the report sssued by the Chairman of a company in the financial statements is reasonable or nol, he cauld seek evidence conclndc that the statement is reasonable and state m a report something like this: tm my opinion. the statement by the chairman regarding X 1s reasonable”. This fsa postive state ‘of his conclusion that the statement is reasonable like this. tn the course of my secking evidence about the statement by the chairman, nothing has come 1013 ‘attention indicating that the statement is not reasonable.” edu | ‘© Negative opinion: In the same scenario, the practitioner could alternatively state m a report sone thing Page| 1 ie : il) enter cttctor en pee Roce es ze - arr eel increased output eit ro Si” ; SS ee ‘ cen eee nt cement i sa ae cet cs 1 pts ons fm mag ener and continues 10 get Saeco trees ms eee el ohne leer emares opis Smet onal mech cleted evidences. Were fete copes de apap ies” Ree or es ee lw ©) Symmes seca 2 Seger bik ei a Momeney ot caging aw toes ecm werkng pap ir wi fi 5 ae : Ammer the Question No. 21a) epee iener weld proealy mci sefeneace 10 the > Maeatgecine a eran of fms following: , ee > The scape of he sai, mctaing re dts te och 0 eden ein, psetins or pronouncements of > Tae fam fey sept er comm rt the mf remus o the managemeat Papi xiv :ee weekeesiaoe nherens Ninnaations of wn audit, together wth the jumnitaticntnn of any Berenurnting internal ontral eystem. there 16 an unaverdabhe ieee eral setae MAY Ferri nore ered “an weaned access 10 whaleve records, documentation and wer information requested in common c sweats the anal Ananer to the Question. No.2) {systematic selection: “hip method involves selecting items using a constant interval between selections, the first interval having a rador start, When using sysematic selection assurance providers must ensure that the population is wot swear ‘such » manger that the sampling interval corresponds with & pariculas patiern sn the rapa A. Sequence or block selection: sampling may be wed to check whether certain items have cexnmple, an auditor may use «sample of SO consecutive cheyues we check whether cheques are s authorized signatories rather than picking 50 single cheques throughout the year particular characterisucs. For sgned by {ih Monetary unit sampling: ‘Tie is selection method that ensures that every CUI in a population has an equal chance of deg seleaed for testing, [tis easy when computers are used. and that every material em will sutorastically be 3 dors fanpled If computers are not used, can be ime consuming to pick up the sarcple, and the b oreope well with the errors of understatement or neyative Yelances Answer to the Qiiestion. No. 266) » Aulomaied working paper packages have been developed which can make the docurnent much easier, Such programs aid preparation of werking papers, lead whedules. tral balanc ftaiemonis themselves, These are automatically cross referenced, ‘adjusted and balanced by the ¢ ‘The advantages of automated working papers are as follows ‘¢ The risk of errors 1s reduced o The working papers will be neater and easier to res ie J Thetime saved will be substantial as adjustments can be made easly all working papers. inc! ‘working papers summarizing the key analytical information . Staridard forms do not have to be carried to the audit locations ‘s Audit work papers can be emailed or faxed for review foding Question No. 3 4) Define audit documentation. Who is the owner of audit documentation and ho have the night of access to those documents? 4 by {b) Critically assess the procedures ‘of obtaining evidence. How are these methods used by the ‘auditors to obtain evidence/s? 2 co) Hassan is working on the audit of Hussein Lad, a large chain. He has been allocated the audit of non-cutent assets. One aspect of this audits the fact oa rec bring the year, which have ben capitalised into now-curen see, 1 ha vorking on are that al the relevant cot have Been capitalised (complies) ot al oes re valued corey a co (austin low will Haan con these two assertions? 7 , roaN“smswor to che Question NOMA) _\pait docamentation (working papers? and documentation (working pagans te recor of poses parformed, relevent evidence oy, and eoactusions reaches n Working papers are the property of assurance providers. T enity’s accounting records, Howeve, the report becomes the As woeking papers belong tothe frm, the assut However, the firm may show woeig PANTS proces is ot prejudiced. fnformaton should not ‘of the clieat, Inspection of tangible assets: Inspection (physteal examination) of tangible assets that are recorded in the accounting records confirms existence, but does not confirm rights and obligations oF valuation. Fo, cxample, machinery record in asset register ca be inspected by assurance providers. Confirmation that assets seen are revorded in ateounting records gives evidence of completeness. Inspection of asse isa good procedure, particularly in the case of assets tha the ely ‘could not function without (for ‘example its production plant), but the weakness associated with inspection i that assets not used in daily production could be hidden from the assurance providers and not included in financial statements. rey are ot a substitute FOF, OOF part gg property ofthe client once It has been is, Ne rance powers ar nt ured 1 tHe 1th ley to the client at their discretion, 80 long as the assurang, Ie made avaiable t thd partes without the Permission Procedures of obtaining evidence Anspection of documentation: Inspection of documents involves examining records or document, fr example, looking a sales contract ‘ot a share certificate. Looking at source documents (e.g saes invoices) and tracing to financial statements gives evidence of completeness (eg. of revenue). The strength ofthis procedure depends on what is be i ing inspected to give evidence. For instance, inspection of a purchase invoice gives better quality evidence fe recta ‘ales invoice, because a purchase invoice s created by a third party 7 ‘Observation: This involves watching a procedure being performed (for example, post openi n « le, post opening) This procedure is relatively weak, ast only confirms that the ing pe = ‘ ly tthe procedure is being performed correctly when Inquiry: This involves secking information from client management or staff or external sources and The suengh or weakness of this procedure will depend cof whoa the inquiry ETE Ac letter eis fhe save pir chat alee «question or they are seeking to conceal a ero oF fraud. ir alemdar ie eee of toe ances Seeking confirmation from a third party €g. confirmation from bank of bank Page | 4 xv]be a very strong procedure but there may be instances where ird party is motivated may the thi \ ated 10 gecalelation: Checking mathematical accuracy of lens tecords, for example, adding up led . ledger accounts. gecaleulaton is evidence created by the assurance provider s0is strong evidence : Independent! : eperformance: Independently executing procedures ee a raad aid brick Pp or controls, either manually or through the use of the fact that the assurance provider i se carries out the performance of a control himself makes it strong Analytical procedures: Evaluating and companng financial fe Na nod investigating uncapccted ee fal and/or non-financial data for plausible idence here is limited by the strength or weakness of the underlying accounting system Hower, this can a song procedure if comparison is made to items that do not rely on the seme ‘accounting system of that the assurance provider can corroborate outside the accounting system. Answer to the Question, No, 3(c) Completeness Hassan will: > Oblain architect's certificates for the stores. certifying that the work 1s complete > Oblain a schedule ofall the costs capitalised into the stores; this is also likely to have been verified by the contractor, giving comfort that the costs are complete Valuation Hassan will: Mech asample of costs to appropriate sources of evxdence, for example, bout costs to payroll records gr contractor bills, materials costs to purchiase invoices or contractor bills, finance costs to statements from lenders (for example, bank statements) 5 > Inrespect of finance costs, Hassan will review bank statements to ensure that all relevant finance costs have been included. Question No. 4 (a) What are the different applications controls that auditors may test and how? 9 (6) What are the objectives of establishing control over recording of wages and salaries and deductions? 5 (© NHN Hotels Ltd. (hereafter referred to as NHN) is listed company which owns a number of hotels in Bangladesh. Each hotel is a subsidiary company of NHN, for example, NHN Dhaka Ld is a hotel in Dhaka, NHN charges each hotel a management charge, which is determined tie Tred calcnlation depending on the number of rooms at the hotel. One of the things this cee cage ontexs is the interoel suiit department which is managed centrally. The Kv) Pageeg A carry out cyclical operational audits ayy), ho internal audit departiment is required riven ces isaudited annually, y,./% rel hoe Chiagons Hotel, Wi och tl being auited al least once in three rc rege aaa von at activites that shouldbe performed by he iments Separan ~ Ny 7 * Answer to the Question No. 4(a) Application controls ee [ f application controls : — Mam i the system's output is comp cs asonable assurance that the s “A Plete, seeciaed by Ge Z a a ise the auditor may decide to limit tests of controts these manual controls. | | user | Controls over In addition tothe manual controls exercised bythe user, the controls tobe system output | tested using information produced by the computer or are contained within computer programs, sch controls may be tested by examining the system output using either manual procedures or computer sided audit techniques (CAAT) Such outputs may be inthe form of magnetic media, micrfn,o- Printouts. Alternately, the auditor may test the control by performing it the use of CAATs. | Programmed | In the case of cerlain computer systehs, the auditor may find that it is no | control proce- | possible or, in some cases, not practical to test by examining only use; | dures controls or the system’s output. The auditor may cor of control by using CAATS, such as test data, reprocessing transaction data | of in ubusual situations examining the coding ofthe application ace stel situations, examining the coding of the applicati General If controls may have pervasive effet onthe processing of transactions in application systems ia Rese general consol ae not effective, there may be a risk that misstatement occur ev 0 undetected ‘application consis possible that manual procedures exercised by users may provide effective conito| at the application level. Wages and salaries are coretly recorded inthe nominal ledger all deductions have been calculated correctly and are authorized > the correct amounts are paid to NBR. | Page | 6 VII!Answer to the Question.) 4a goomon audit activities should be performed by the inte department as follows cag audit” comprises a nuber of elements, all of which have been carried out (alt q {22 Sme me) for the fll eycical audit to have been completed These ee = » surprise cash counts i key cash transactions areas (rection bu, restaurant) eset inspections, particularly linens and leisure facilities saventory count for certain assets, particularly the ladder and bar rest of controls in key svstems; sales, purchases, p2\tol! health and safety cont. systems testing + review actual results agamst budget for the ye > In addition, af any area shows indication of irregularities, for exany le, VAT and revenue recognition that area should be audited in detail sie reven “en Question No. S (a) Why ethical guidelines are required for the professional accountants? c {b) Describe in bref the following terminologies alongwith related threats and safeuards as they are used in discussing about ethics in accountants’ business: 9 i) Conflict of interest ii) Second opinion iii) Gifts and hospitalities ” (©) Sayema is a qualified accountant. She has recently moved out of practice and Wken UP the position of financial controllef of a small, non-listed company, Lavender Lane Ltd The company Posticlbort-term cash flow problem. Sayema was recently called into the board meetme ond saved If abe could defer some income from the previous financial year so as to influence when ‘he tax (both VAT and corporation tax) would be due on those sales, The directors were messteit tre euch deferral was necessary and that she should consider this request more yn the nature of fan order, Comment on the following options availaQ.le to Sayema 1) Repor ber concems to the audit commustee of the board of & tes ii) Take advice from ICAB iii) Take advice from legal advisor’s. : 6 Answer to the Question No.S{a) Ethical guidelines Professional accountants have a responsibility to consider the public interest and maintain the reputation ofthe accounting profession. Personal self-interest must not prevail over these dutics. The IFAC and ICAB Codes of Ethies help accountants to meet these obligations by setting out ethical guidance to be followed. Acting in the public interest involves having regard to the legiiriae interests of clients, government financial institutions, employees, investors, the business and financial community and others who rely upon the objectivity and integrity of the ‘accounting profession to support the propriety and orderly functioning: of commerce. In summary, then, the key reason accountants need {© have an ethical code is that people rely on them and their expertise. It is important to note that this reliance ‘extends beyond clients to the general community xls Page| 7 4by rel gis 700 and also by relevay, regulated DY nents should be included in a ny audit report is ee ais 6 this context, what sentially _ The content of the Banglades! audit report? ‘Write seq! ‘ ic elements, usually jn, Answer: According to BSA 700, th che following layout. > Title audit report should include the following basi Addressee atements audited financial sta juctory paragraph identifying the for the financial statements > > Introd > A statement of management's responsibilty of the auditors responsibility scription ofthe work > A statement performed by the auditor > Scope paragraph, including a ragraph containing an expression of opinion on the financial v Opinion pa statements v Date of the report > Auditor's address > Auditor's signature 4 measure of uniformity in the form and content of the aut report is desirable because it helps to promote the reader's understanding and to identify unusual circumstances when they-occur, 4. ICAB and IFAC Code of ethies sets out the rules under which auditors should accept new appointment. What procedures should the new auditors follow to comply with the above set of rules? 6 Answer: ICAB Code of Ethics as well as IFAC Code of Ethics sets out the rules under which auditors should meceptner appointments. Before a new audit client is accepted, the auditors must ensure oe is no independence or other ethical issues likely to cause significant problems with ical. Furthermore, new auditors should ensure tt er ir S nsure that they have been appointed in a proper Page|6 24. ASSURAN( E Suggested Answer ‘Nov-Dec 2017 uation No. I. ‘hat is the meaning of auditor's normal ex u - oi » : - ‘ A report which ny ey of absolute assurance or corre: ss cannot be provided duc ic som aitations. What ae $ ‘¢)_ Define assurance engagement in an audit function 3 @ In an audit engagement, the engagement team docs so mrs “hnos /!) sing the defined methodology the Engagement Partner approves. | these are « itable report is jssved 8s Per prescription of International © sds on Auditing You =. scicv) ~ked to draft an soqualified audit report as per ISA 700 app ...e for a company. 10 Answer to the Question No. 1(a): The auditor will normally express his audit opinion by reference to the ‘true and fair ~'~ »", which is an of reasonable assurance’ Whilst this term is at the heart of the audit, ‘truc fair view’ are fox defined in law or audit guidance. However, for practical purposes the follow. definitions are geazrlly accepted: ree: Information is factual and conforins with reality, not false. In addition, the information conforms wih required standard and law. The accounts have been correctly extracted from the books and records Fair: Information is free from discrimination and bias in compliance with expected standards and rules. The accounts should reflect tlre commercial reality and substance of company’s underlying transactions. Answer to the Q No. 1(b): Assurance can never be absolute. Assurance providers will never give a certification of absolute ‘correctness due to the limitations of the nature of the service. ‘The limitations of assurance services include : The fact that testing is used-the auditors do not oversee the process of building’ the financial statements from start to finish 1s The fact that the accounting systems on which assurance providers may place a degree of reliance also have inherent limitations ‘© The fact that most audit evidence is persuasive rather than conclusive ‘s) The fact that the client's staff members may collude in fraud that can then be deliberately hidden from the auditor or misrepresent matters are the sare purpose. © The fact that assurance provision can be subjective and professional judgements is an essential part ‘whale concluding an opinion © The fact that assurance providers rely on the responsible party and staff to prov ide correct information, which in some cases may be impossible to verify by other means. © “The fact that some items in the subject matter may be based on estimates and are therefore uncertamn. Its impossible to conclude absolutely that judgmental estimates are correct. Page | 5report Colght sell be Li “ hve Caet Uat the ature at HIve an vert wii . Jhon the annowanse piven tren Oat Aono 40 ne venta Nt LUD, ou Woe wh #4 ARNE CORIO, desig ene he SN ewe wubb oss ir than te rspoible party, aba the atone of Sea ashy cK AN TH TT AVE varios examples of tg FT aaarey mi flanglateah (the ait. Asturance engagements can sive either a reasonable leve} itt We anit [hay at won, alo gives reasonable level ef wma Avnet the Qnietion Ne. tat) INDEPENDENT AUDITORS REPORT HLINB, a8 every judgment ang degyee of eanttione ‘To the Shareholters of ANC Company We have auntie the assownyrany ng financial statements of ANC Company, which comprise the statement ‘Of fnanial panition as at December V1, 20N1, and the statement of comprehensive incame, statement of ‘vies 1h eAUHTY aA taternent OF cash Hows fOr the year then ended, and a summary of significant eeteie polo explanatory information, Management's Responsibility for the Pinanctal Statements i Management GFABE Company is responsible for the preparation and fair presentation of these financial Hatemien Hh AaGOAMANKCS wih Irvermational Financial Reporung Standards (IFRS), the Companies Act i 1994 aie thio Applicable laws anc! regulations anal for such internal control as management determines is | AP MADIE THe prepration of financial statements that are free from material misstatement ‘hater de Wi fhauad oy cr I statements based on our audit, We With Bangladesh Standards on Auditing (BSA). Those standards Toquirements and plan and perform the audit to obtain reasonable Statements are tree from material misstatement. Pes 10 obtain audit evidence about the amounts and disclosures in dures selected depend on the auditor's judgment, including the erent of the financial statements, Whether due to fraud or error. itor considers internal control relevant to the entity's preparation ats in order to design audit procedures that are appropriate in ose of expressing an opinion on the effectiveness of the entity's -evalvating the appropriateness of accounting policies used and the made by mangement, as well as evaluating the overall obtained is sufficient and appropriate to provide a basis for 4 true and fair view of the financial position of ABC cial performance and its cash flows for the year then ing Standards.a February 20X2 Chartered Accountants question No.2: a) Define control activities. Explain the types of control activities with examples 10 1) What will be the tests of Controls in recor:‘ng wages and sa! and any deductions thergof? 9 | Define CAAT. What are the main types AT re being used while conducting an audit? 6 serio he Question No.2 (ef control activitie: Explain the | The policies and procedures thet help « + | types of control activitie wish management directives are carried out | examples. | | . [Wperat Fem Taplnaton | conte! activity = | ‘asthorie | Approval | Trans tions should be | | | ation | and approved by an | | | Control | appropriate person, for || | of example overtime | documen | should be approved by ts | department manager. Performa | Reconcili | Reconciliations involve |[nce | ations | comparison of a | | | review Specific balance in the || accounting records with what another : source says the balance should be | Differences between the two figures should only be reconciling - items. For example a bank reconciliation. ‘Compari_| For example ng ‘comparing records of internal | Goods dispatched to data with | customers with external | customers’ | sources | acknowledgement of | of goods that have been | p informati | received. | i a _ 5 Page |7 bea nemmeeey ,-— oT Wala ono! acount BNE together transactions | reviewio | irvdividua! ledger: | control rial balances DANG er al ara tint | casa forthe tatances | crganiiation a whole | Preparing these ca" nightight unusual transactions oF accounts. _ | | ama fc [For esto cer | on we to see If Individual process) | adthmeti | voices have been ry al added up correctly | accuracy of | records | __ | Physkal | Comparl | fi ymple a physical control | ngthe | count of petty cash results of | The balance shown ia cash, | the cash book should ‘security | be the same amount as | | and | inthe petty cash box | account a records | Aimniting | Only authored | physical | personnel should have access to | access to certain assets and recordstiny be directed, and the exient of ove inquiries, the —muditor considers — whut formation iriny be obtained that helps the sunitor in identifying risks of material ‘misstatement Annlytical procedures may be helpful in \dentitying the existence of unusual Hransnetions of events, and amounts, ratios and trends the ght indicw th Nave financial — statement nyplications. tn performing procedires as risk assessment procedures, the suditor develops expectations about plausible relationships that are reasonably expected 19 exist. When comparison of those expectations with recorded amounts or ration developed from recorded amounts yields unusual or unexpected relationships. the auditor Considers those results in identifying risks of material misstatement However, when such analytical procedures use data aggregated at a high level, the results of those analytical procedures only provide a broad initial indication about whether a material misstatement may exist Accordingly, the auditor considers the results of such analytical procedures along, with other information — gathered in identifying the risks of material misstatement Observation and inspection may support inquiries of management and others, and also provide information about the entity ‘and its environment. Such audit procedures ‘ordinarily include the following: Observation of entity activities and ‘operations. Inspection of documents (such as business plans and strategies), records, ‘and internal control manvals. sReading reports prepared by management (such as quarterly management ‘and interim financial statements) and | those charged with governance (such_as Page | 9‘What wil ba the wuts of Convo ol [A bey control assurance prodder will be] recording wages and salaries and concerned with the reconciliation of wages and deduction thereof? seats for wegen, tree re showid heve beenro | i | Question No. 3: The audince should obsain writen represematons om camagement on maners selaang @ the Snaacw! soremems when other appropriate audi cndences collecied may sot be 5 ct w be sufSocent 3) How does Leter of Representation support 2s aadit evidence? $ 1) Want actioes should the auditor take when oo other endence 5 salable amb only smernel confirmations form significant basis for opimicn? @ What actions should the auditor wke when camermct s heat pas evidence of management's acceptmce of respunsitility and of the financial satements and design and mplemencovea Competence ofthe management + Honesty ont integrity of the yuanayenent Sense of diligence at Hie care at the Avuaina ger Answer fo the Question No, Wh) Assuming that wineorroborAted internal confirmations are permitted Am ypecitically fled SIFUINSTANCRS SCH AF MaNAgeMent's ‘vient, snanagernent’s judgement, andl facts Anowledye confined 10 management, an alitor may concliste that Ho other evidence 1s avyilable for an aysertion that form 4 ‘Significant basis OF the opinion. Iv those exceptional cases, the matter omy be of such siynifican © the ‘nuditors refer to the tepresentations in theis report as boing relevant to a proper understanding Of the basis ‘Of thei opinion. There are instances where management intention ard whew the matter is juclysnental ‘uv opinion, fran example the tain sion of «patie estos iaaiaiiel ‘When fio other evidence is available (ix an assertion not specifically ilcntified above and he y itor should modify the report ‘lates that when management refuses tw provide necessary represent udlitor should Aisclaimy bis OF Her Opinion. 16 the principle As that internal confirmation dernonstrates the by the ement of | wsibility and accountability for the assertion ts valid. the refusal to. plies management's unwillingness tw accept responsibility and In such circumstances, the auditor's confidence si management Ao such an extent that a qualified opinion may not be a detensible from the engagement should be the options when management However, there may be circumstances when the auditor ot obtained does nol undermine his or het conclusion Ment’s refusal to provide ternal confirmations tions, tations can be expected to be well informed on the representations received do not agree with should: janaking further inquiries, to ascertain whether carry out altermative audit procedures esentations made by management (i¢Aah peers detrei ‘oF inateriality. ts @ onatter of profesional judgerme', ond is affected by the vr percegtin of ie financial information ees of wsers ofthe financial statements. The concept of al ry boy the audlitor both da planning and performing the audit, amd un evahaating the Aico ents aiataterents wt the aunlit and of uncorrected misstatements, 1f any, on the financial ‘aon! tay forimiag (he opinion in the auditor's report Ws 10 tne tha heater shoul Be conshered by the audlitor ‘o Detereitinyg the nature, (ining ‘anal extent of procedures, and ivauating the effect of misstatements . Trough the Kit prosesire, aunhtor must Keep nam that ¢ marer e-atertal iE Hts omission oe Frssatement wOUKE ceasoniably ynthuence the eeomorn) aken on the basis of the Financial statements, Materiality depends on. the sies tert of its omission of Anger tothe Qa Not (hs Materiality considerations and fivation during auslit planning are exiremely important, The assessment of woteiality at this stage should be based on the recent and reliable financial information andl wall help to tan effective and efficient aut approach Materialty assessment and fixation will help the saditors to decide ‘+ How many and what items to examine 4 Whether to use sampling techniques 4¢ What level of error is likely to lead to anv auditor to say the financial statements do not give true and far view : ‘The resulting combination of audit procedures should help to redice audit tsk to am appropriately low jewel. This ts how risk and materiality are closely connected. The value of discovered errors should be ‘at the end of the audit to ensure the total is below tolerable error, To set the matersality level seeitors need to deeide the level of error which would distort the view given by the accounts, Because framy users of accounts are primarily interested in the profitabijity of the company, the level if often expressed as a proportion of its profits Answer to the Question No.4 is) ‘Subsequent Events are those events occurring between the date of the financial statements and the date of the nuitor’s report, and] facts that become known tothe auditor afer the date ofthe autor sr Venfy rights and obligations by agreeing Ue addition of plant and equipment to a supplier invoice in the name of audited company” } Review the list of additions and confirm that they relate to capital expenditure items rather than, repairs and maintenance | & Review board mimutes to ensure that significant capital expenditure purchases have been authorized by the board 4 Fora sample of additions recorded in P&E physically verify them on the factory floor to confirm existence. 7 Disposals: 4 Obtain a breakdown of disposals, cast the list and agree all assets removed {rom the non-current asset register to confirm existence. __& Select a sample of disposals and agree sale proceeds to supporting documentation such as sunry sales invoices. 4 Recalculate the profitoss on disposal and agree to the income statentent | Answer Q. No. 3 (2) There are various types control activities identified in a sound ‘control environment. Those activities _itchide authorization, performance reviews, information processing, physical controls, segreystion of duties etc. Brief description of these activities ig given in the table below: ba : WW Page |9=} Transactions must be approved by a, 4 Differences between the two fi ures oa | only be reconciling iterns For example, comparing records of goods —~ dispatched to customers with customers | + acknowle germent_ For example, checking to see if individual —~) imvoges have been added up correctly For ample, aphysical count of petty cash Answer Q.No.3(8) Audit Document ok paper) isthe eon of rocedes performed, relevant evidence obtained 7 8 conclusion reached, ‘fit document t work papers should provide; {> \efccn ad apopiaterevord of he bas forte assurance provider's opinion on the mater; and 4 alge tthe eagagment was performed it accordance wih sandards and applicable legal ond regulatory requrement Aust documentation serves a number of additional purposes, including the following: ‘Assisting the engagement team to plan and perform the audit 4 Assisting relevant members to direst and supervise the audit work; ‘Enabling the audit team to be accountable for its work, 4 Retaining’ record of continuing significance for future audits; © Enabling th conduct of quality contro eviews and inspections & Fhabling the experienced auditor to conduct external , posneyeatessati inspections in accordance with applicable legal, Question No.4 (a) The Audit Engagement Letter is a very vitl document underly required to have salient knowledge about the engagement lense eet eugagement. As you are i) What are the objectives of Aut Engagement Let? 1) Write in brief the basic contents of an Audit Engagement Letter, : 5 (&) Despite having substantial uncertainty on ving Concer issue, Sp . 7 Financial stdement on Going Concem bass What effec il ae eeu LW. prepared its report in the event of uncertainty over Going Concem under following cna nye O8 YOU indit’ / 1) The matter fully disclosed in the financial statements. 1) The matter not disclosed in the financial statements. subject Pe 18gover N04) pe ctjectvs ofthe engagement letter are to, F the extent of the firm’ > Define clearly firm’ svauditor’s responsibilities and so minimize the possibility of an smisundersizading between the client and the auditor oes i ‘written confirmation of the firm's/auditor’ i scope of 1 Provide Bee bre cree. /auditor’s acceptance of the appointment, the scope of the fan engagement letter is not issued to clients, both new and existing, there is scope for argument about precise extent of the respective obligations of the client and its directors and the: auditors The tlements of an engagement letter should be discussed and agreed with management before i 1s sent answer Q. No.4 (aii) he engagement letter would generally include reference to the following, 4 The objective of the audit of financial statements 4 Management's responsibility with respect to accuracy of the financial statements -and ensuring intemal controls. & The scope of the audit, including reference to applicable legislation, regulations, or pronouncements cof professional bodies to which the auditors adhere “The form of any report or other communication of results to the management. 4 The fact that because of the test nature and other inherent limitations of an audit, together with the inherent limitations of any accounting and internal control system, there is an unavo? even some material misstatement may remain undiscovered. © Unrestricted access to whatever records, documentation and other information 1s requested in connection with the audit & Expectation of receiving from the management writen confirmation of representations made \n ‘connection with the audit, ° Answer Q.No. 4 (b.i) Effects on audit report will be as follows Unqualified Opinion with Emphasis of matter paragraph on going concem uncertainty highlighting the existence of material uncertainty relating to the events or condition that may cast significant doubt about the entity's ability to continue as a going concern and draw attention to the notes to the financial statements that disclose the matters where management's plans to deal with the events are explained. Answer Q. No.4 (b.ii) Qualified opinion with ‘except for’ phrasing if considered material without being pervasive; * Adverse opinion if considered material and pervasive; = Disagreement over non-disclosure resulting in issuance of qualified opinion or disclaimer of opinion depending on the significance of the potential impact on the financial statements due to disagreement. Question No. 5 Ethics in the business is considered as the most expected core vale which individuals should follow and demonstrate in their respective field of activites. International Ethics Standards Board for Accountins (QESBA) has usued a set of Code of Ethics which [CAB being a member of IFAC has adopted word for ‘word for its members to follow in their respective field of work 19 Page | 11sal acc Une AND hy yoo oa yence in fact aud ivleperiten , wt ont oo) a 5 ) we Oy wo rest teat, What are vagy, abst § 5 juts * » ally. Cite 160 SUCH eXanpi et penne rei 2 sew pap ae : i uta 10 8 (i, steel, oes! Na (8) on on all PO elient’S oN bol tio eo ata affect the Objectivity of th ity poses The re mes. CS eee a honest assessment and evahiation of vet compat management is unlikely tg to them ral she auditors ' aitor’s protessic ical pics ene any but be sen 10 De independent. Th Mich as financial intrest in the client, close fopmanagement May impair onal responsibilities. its sjonal accountants. aero oe 7 airthe objectivity, should not tke ind remain free Answer Q.No.5(0) Independence of Mind: The sate of mind th pis the expression of a conclusion without being ere sdunes at compromise profs judgnent allowing an individual (9 sx‘ with integrity and ees betty and profession skein. i“ ni ; independence in fact: beevins in fact exits when the auditor is actually able to maintain 3” Independence in snpedence epson: lpn parish rest of oes interpretations this Terao eterna ne Cento that 8 reasonable and reasonably conclude fms ora members ofthe mation, including safeguards applied, would skepticism had ben compromised assurance team’s integrity, objectivity or profession! Answer Q.No.5 (6) Foll lowing are the sfegurds available to avoid % Disposing of te inert, eet threat (financial interest)wot firm ped _ quality control procedures requiring staff to disclose relevant financial for themselves and mmediae family members. They shoul also foster «cure of voluntary | we of an ongoing basis so that any potential problems are identified on a timely basis, | pre NOE) 4 110 remember that accountants in business are subject to the same fundamental principles as wins in price ae, However, an accountant i Business may find himself in a position that faces essure from the management to act uncthically or to act to the interest of a small community a goes cory 10 the respet ofthe profession, Unlike professional accountant in practice. those are 5 usiness appear to be more vulnerable in terms of independent behavior. Apart from established Miser press, Often there appear situations when such accountants are guided by the call of the Page ‘gen accountants 1” business find themselves in dilemma when they are guided by the management as to (patent of certain accounting transactions o presentation of financial statements in the interest of a 0? of people or to the contrary of the national exchequer. fale of such unethical acts may include 4g Lieto or mislead auditors or regulators, {sue or be associated with published reports (for example, financial statements, statement of tax computations) that materially represent the facts . Oat Page| 13