Question

please,short answers

A. Majdi has a degree in accounting from BZU and works for a local accounting office. He was asked by a friend to prepare Financial statements for a small company in Ramallah. To help his friend Majdi prepared the financial statements and a report indicating that the financial statements were audited by him. What standards were violated and why? Is there a violation of the elements of audit quality control, briefly discuss?

b.Mira A Certified Public Auditor licensed in Palestine is the partner in charge of Ooredoo audit. In order to save cost, she hired a group of students from Al-Najah University to help her conduct the audit. A month later Mira received the audited financial statements and the report from the students. She signed it and send it to the board of directors of Ooredoo. What standards were violated and why? Is there a violation of the elements of audit quality control, briefly discuss?

Answer 1

Ans-(A)

The very basic Pricipal of "Independence" has been violated as the Majid was the preparor of the Financilal statements and the auditor too.Maker and Checker cannot be the same individual.

An independednt eye and mind has to conduct the audit.In this case Majid would not be in a position to point out deficiencies in statement prepared by himself.Therefore the assurance the finacial statement reflect is compromised.Any lack of  knowledge on part of majid of accounting treatment will too tend to get consumed in the process and same appllies to any applicable standard controls.

Ref - ISA200

Ans-(B)

Quality of engagement team is the responsibility of the Auditor.In addition it is also expected that the work of the team is regularly and closely monitored by the Auditor.Bot the above principals have been compromised by Mira.Also Auditor has to review the work which again was not done by Mira.She also did not have any consultation discussions with the team.On all accounts the Quality of audit was compromised and also Mira failed to stand by her professional and ethical duties.

Ref - ISA 220