Question

In: Accounting

Miss Nsiah is a qualified chartered accountant who prepares financial statements for a firm located at...

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.

Solutions

Expert Solution

Solution :

The fundamental ethical principles to be complied by Miss Nsiah - a professional accountant in the above case is as follows :

1) Integrity :

A professional accountant should be straightforward and honest in all professional and business relationships.

Miss Nsiah does not qualify for a practicing certificate and so she cannot provide audit services to the client. However, the CEO of the company wants an audit opinion from here.

In this case, Miss Nsiah should duly inform the CEO that she is not qualified to provide an audit opinion.

2) Objectivity :

A professional accountant should not be biased or allow any conflict of interest or undue influence of others to override their professional judgments.

Since Miss Nsiah is directly in touch with the CEO of the company, she should not get influenced by the CEO's actions for the scope of additional work and she should be straightforward and honest in pointing out & communicating the deficiencies and material errors in the previous financial statements.

3) Professional competence and due care :

A professional accountant should be competent and have the requisite professional and technical knowledge in the work performed.

Miss Nsiah does not have any prior experience and she does not feel competent to solve the complex tax issue. To ensure professional competency, she should not accept the work and inform the CEO about her incompetency to perform the work.

4) Professional behavior:

A professional accountant should comply with all the relevant laws and regulations.

Since Miss Nsiah does not possess a certificate, she cannot engage in a public practice which includes providing an audit opinion.

Hence Miss Nsiah should maintain her professional behavior and not accept the audit work.

Note : In case of any queries relating to this answer, reach us at the comment section below.


Related Solutions

D. Miss Nsiah is a qualified chartered accountant who prepares financial statements for a firm located...
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...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of each month. The following transactions for Randy Guttery, Landscape Consultant took place during the month ended June 30, 2019. The following transactions are for Randy Guttery, Landscape Consultant. Transactions: A. Guttery invested $146,000 in cash to start the business. B. Paid $4,600 for the current month’s rent. C. Bought office furniture for $15,320 in cash. D. Performed services for $8,600 in cash. E. Paid...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of each month. The following transactions for Randy Guttery, Landscape Consultant took place during the month ended June 30, 2019. The following transactions are for Randy Guttery, Landscape Consultant. Transactions: Guttery invested $151,000 in cash to start the business. Paid $5,100 for the current month’s rent. Bought office furniture for $15,820 in cash. Performed services for $7,300 in cash. Paid $1,160 for the monthly telephone...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of each month. The following transactions for Randy Guttery, Landscape Consultant took place during the month ended June 30, 2019. Transactions: Guttery invested $140,000 in cash to start the business. Paid $4,000 for the current month’s rent. Bought office furniture for $14,720 in cash. Performed services for $9,200 in cash. Paid $1,050 for the monthly telephone bill. Performed services for $15,000 on credit. Purchased a...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of each month. The following transactions for Randy Guttery, Landscape Consultant took place during the month ended June 30, 2019. The following transactions are for Randy Guttery, Landscape Consultant. Transactions: Guttery invested $80,000 in cash to start the business. Paid $3,000 for the current month’s rent. Bought office furniture for $8,360 in cash. Performed services for $4,100 in cash. Paid $625 for the monthly telephone...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of...
The accountant for the firm owned by Randy Guttery prepares financial statements at the end of each month. The following transactions for Randy Guttery, Landscape Consultant took place during the month ended June 30, 2019. Transactions: a. Guttery invested $80,000 in cash to start the business. b. Paid $3,000 for the current month’s rent. c. Bought office furniture for $8,360 in cash. d. Performed services for $4,100 in cash. e. Paid $625 for the monthly telephone bill. f. Performed services...
QUESTION 1 32 MARKS Mpumi Madonsela has recently qualified to be a Chartered Management Accountant and...
QUESTION 1 32 MARKS Mpumi Madonsela has recently qualified to be a Chartered Management Accountant and she is working at one of the big four accounting firms. Due to the limited salary of an article clerk, Mpumi did not contribute to any provident fund. Fortunately for her, the firm contributed to a pension fund on her behalf. She was not content with only a pension fund but was adamant that she wanted a provident fund to supplement her very extravagant...
X Company prepares monthly financial statements. In January, it purchased inventory on account. The accountant recorded...
X Company prepares monthly financial statements. In January, it purchased inventory on account. The accountant recorded the transaction as an increase in Inventories and an increase in Retained Earnings. As a result, which of the following is true regarding the January financial statements? Retained Earnings was understated. Expenses were understated. Accounts Payable was understated. Inventories were understated. Accounts Receivable was overstated. Revenue was understated.
Is Your Firm Qualified? For discussion: What characteristics of an accountant or accounting firm should a...
Is Your Firm Qualified? For discussion: What characteristics of an accountant or accounting firm should a governmental entity consider when selecting a practitioner to perform their annual audit?
X Company prepares monthly financial statements. On September 6, its accountant made an entry that resulted...
X Company prepares monthly financial statements. On September 6, its accountant made an entry that resulted in a $54,000 increase in Cash and a $54,000 decrease in Accounts Receivable. Which of the following transactions is consistent with this entry? X Company did which of the following? borrowed $54,000 from a bank and signed a note. received $54,000 from a customer who bought merchandise with cash. received $54,000 from a customer who had previously bought merchandise on account. paid $54,000 to...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT