Question

Assume that you are a junior auditor in a small auditing firm. You have been working with them for one year now. One senior auditor has been on sick leave for one week already and still has no sign of coming back to work. You have been told by the audit manager that you must complete some complicated bank reconciliation work which the senior auditor should have done but she became sick. The due date given by the manager seems unrealistic, given the complexity of the work. You feel that you are not sufficiently experienced to complete the work alone and you would need additional supervision to complete it to the required standard. Your manager appears unable to offer the necessary support because he was always busy. If you try to complete the work within the proposed timeframe but fail to meet the expected quality, you could face negative consequences. You feel pressure from the audit manager to do what he commanded you to do. And you also want to do for the firm what you can contribute in this time that it needs everyone’s help.

Required: Explain your answer to the following questions:

1. Which fundamental ethical principles in ISA 200 will be affected in this scenario? You can

explain more than one ethical principle, if applicable.

2. Can you refuse to perform the work? Explain your opinion.

3. Could your reputation as an individual and the reputation of the firm suffer if you attempt to

perform the work? Explain.

4. What could be the possible course of action?

Answer 1

1.The following fundamental ethical principles in ISA 200 will be affected in this scenario:

Integrity: Can you be open and honest about the situation? Would it be right to attempt to complete work that is technically beyond your abilities, without proper supervision?

Professional competence and due care: Is it possible to complete the work within the time available and still act diligently to achieve the required quality of output?

Professional behaviour: Can you refuse to perform the work without damaging your reputation within the practice? Alternatively, could the reputation of the practice suffer if you attempt to perform the work?

2. It would be unethical to attempt to complete the work if you doubt your competence. However, simply refusing would cause significant problems for both you and the practice. You could consult your professional body. If you seek advice from outside the practice (for example legal advice), you should be mindful of the need for confidentiality as appropriate.

3. The work being asked to perform is beyond the usual ability.If attempt to perform work it is not as per professional behaviour of IAS 200 which is not acceptable and can bring disrepute to an individual as well as practicing firm.

4. Possible course of action

You should explain to your manager that you do not have sufficient experience to complete the work to a satisfactory standard. However, you should demonstrate a constructive attitude, and suggest how the problem may be resolved. (Your professional body is available to advise you in this respect.) For example, you might suggest the use of a subcontract bookkeeper, or contacting the client to enquire if the deadline might be extended so that the work may be performed when colleague returns from sick leave. You might also explore the possibility of assigning another member of staff to supervise your work.

If you feel that your manager is being unsympathetic or simply fails to understand the issue, you should consider how best to raise the matter with the person within the practice responsible for training. It would be diplomatic to suggest to your manager that you raise the matter together, and present your respective views. This would have the added advantage of involving a third party.

You should document, in detail, the steps that you take in resolving your dilemma, in case your ethical judgement is challenged in the future