Question

The following situations involve potential violation of the general ethical principles as outlined in APES 110 .You are asked to advise whether they involve a violation or not of the ethical principles 
and if there is a violation explain which ethical principle has been violated and the reason(s)why it is or isn’t a violation .

a) Jenny Wang is the Senior Auditor on the audit of Panania Cars Pty Ltd , a large car dealership,a which sells new and used cars .The Sales Manager advises Jenny Wang that there is a sale to long established customers of the car dealership and since she has audited the company for the past six years she can purchase the new cars at a twenty percent discount on the discounted sales price.

b)Katrina Wearne is the auditor on the audit of Lancom Cosmetics .Katrina is auditing the company during November and December 2018 and has been given a Christmas gift of $350 cosmetics from the company .

c)A client requests the assistance of D.Marron ,a chartered accountant ,in the installation of a computer system for maintaining production and inventory records .As Marron has no experience in this type of work he engages  a computer consultant who he has confidence in to carry out the review.Due to the highly technical nature of the work Marron is not able to review the computer consultant’s work and once the client has agreed Marron gives the go ahead for the installation of the computer system.

Answer 1

a)

FACTS OF THE CASE:

Jenny wang is the senior auditor for Pania cars pvt ltd. Which sells new and used cars.

Since she has audited for company from past six years, sales manager advice to purchase car at 20% discount

Analysis:

Even though jenny is auditing the same company past 6 six years. It is not correct to buy car in the same company

with 20% discount. It will loose her independence towards the company. Auditor should as a independent.

Conclusion

Thus, Buying a car with 20% discount is voilaiton of ethical principles

b)

FACTS OF THE CASE:

Katrina is the auditor for lacom Cosmetic company. The company has been given a chistmas gift of $350 cosmetics from the company

Analysis:

Receving through gift of $350 cosmetics from the company is not ethical practice.

Conclusion

Thus recieveing gift from company in which you are doing audit audit is voilation of ethical principles

c)

FACTS OF THE CASE:

A client requesting a CA to install computer software. Since Marron doesn’t has experience. He taken a tchnical person assistance

to complete that project

Analysis:

If any CA is working in the area in which he is familier to his profession. He can take considered profeesional advice to complete the

project smoothly.

Conclusion

Thus, marron is using Computer consultant assistance to intsall software is not a guilty. It is not voilating any ethical procedures.,