MAA303 Auditing - Case Study Assignment Help

Question 1

Each of the situation defined in the case study has got some sort of ethical and professional issues. The discussion on each of the observations is as following:

Situation A

The ethical issues in situation A is that there are instances to prove that Sam Kerr who performed the audit for MEA, has not either performed it in the proper manner or has not performed it at all. Although, that is not confirmed yet, in any way it has not been carried out as per the audit engagement agreement, which requires the audit to be practically performed, and not to be reported without the actual testing and vouching. This is clearly an issue of assurance engagement as the B&D have committed to perform audit and provide with audit opinion. The audit opinion can only be provided reliably if the auditor has performed audit functions and the opinion is credible. The question on the firm’s integrity and professional behavior may also rise.

Situation B

In the second situation, James has carried out an ethical fault. As both Myar and DyZons are audit clients of James, an he has opened the email by one of his clients to the other, this will create a conflict of interest for James, and the objectivity of his opinion to the clients would be impacted. This will also impact the integrity of the auditor and the client can question the professional competence and due care. Along with that this also creates concerns over the confidentiality principles being practiced at B&D. the 

Situation C

In the last situation the clear professional issue is that the audit firm or any of its participants performing audit can never get in business with its client. This is a clear case of self-interest threat, as it will create close association with client, and the auditor would be in a position to exert its influence to the business. As this increases the stake of auditor in the business and the conflict of interest becomes inevitable. There could also arise the possibility of intimidation. The engagement partner Michael needs to be reminded of the laws and how the violation of this very basic law can lead serious consequences for both Michael and B&D.