Question

D. Miss Nsiah is a qualified chartered accountant who prepares financial statements for a firm located at Tesano. Miss Nsiah does not qualify for a practicing certificate and so she does not provide audit service to the client. This is her first year of preparing financial statements for the firm. When compiling the most recent accounts, she detected some material errors in the previous financial statements. It seemed that the accounts were based on incomplete records as certain costs were excluded, either deliberately or because records were not maintained. The Chief Executive Officer of the firm has also requested some additional work to be completed on a complex tax issue. However, she has no prior experience and does not feel competent to the work. The CEO would also like her to provide an audit opinion as they are planning to apply for funding from a bank and the bank would like some further assurance.

Required:
With reference to Code of Ethics for accountants, discuss the ethical principles applicable to the above scenario.

Answer 1

Code of ethics refers to what should be done or what should not be done in any given situation which would be correct to do. Thinking this is very important. Every field has their own code of ethics.

Now coming to the above mentioned case, first MS Nsiah, is not very practised with the audit cases, nor she has being doing it, so taking into account a audit work would be difficult and is also not correct as she may be doing it wrong which would later cause problems for organization.

So, the ethical behavior that should be shown here is to confess to management that she is not very sure whether she could perform the task well or not.

If company wishes, it could assign this work to someone else or for the purpose to train her, she would be assigned under any senior accountant who would lead her and train her hoe such audits are performed. This way she will also get to learn something new and aidit will be also under supervision of some proficient person.

The other case in the above scenario includes confusion with the previous year financial statements. She founds that some costs ay have been intentionally or unintentionally removed. This should be reported to the management as it is of great Metter of fact. This would affect the organisation causing loss to it

Not reporting it is not at all an ethical behavior. So it's better that Ms Nsiah should report this to management.

Thus, these were the ethical principles associated with the case