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QUESTION 1
Discuss whether or not the CFO complied with the fundamental principles of ethics as stipulated in the
SAICA Code of Professional Conduct. Note that your answer does not have to address the threats.
Integrity
The CFO did not comply with the principle of integrity. He was not truthful and honest in his dealings with the
court and lied to the court.
Objectivity
The CFO allowed the undue influence of the directors to override his business judgements therefore he was not
objective.
Professional competence and due care
The CFO did not act diligently in accordance with applicable technical and professional standards when he
performed his duties otherwise there would have been no financial irregularities.
Confidentiality
The CFO provided evidence in court proceedings as required by law and he did not use confidential information
obtained from Living Well to his own advantage therefore he complied with the confidentiality principle
Professional behaviour
The CFO lied in court and this might bring discredit to the profession as this is not professional behaviour.
QUESTION 2
Discuss the matters that ISA Incorporated should consider when deciding whether or not to accept
Living Well as a new audit client for the 28 February 2021 year end and possibly any future audits.
1) The integrity of the prospective client’s principal owners and key management
Management is associated with suspicious accounting practices as they have been linked to financial
irregularities.
Living Well has not been audited before but independently reviewed and they may refuse to provide ISA
Incorporated with all the information required to complete the audit.
The directors of Living Well have been accused of authorizing financial irregularities which suggests that
The directors may have been involved in unlawful activities.
if found guilty, it could hamper the business’ ability to continue as a going concern and hamper the ability
of Living Well to pay the auditing fee.
2) The competence of the firm, in terms of its capabilities, time and resources, to perform the audit
satisfactorily.
ISA Incorporated is a medium-size audit firm and their clients are unlisted companies. When Living Well becomes
a subsidiary of a listed company it will have to comply with JSE requirements and regulations. ISA Incorporated is
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Distribution of this document is illegal
QUESTION 1
Discuss whether or not the CFO complied with the fundamental principles of ethics as stipulated in the
SAICA Code of Professional Conduct. Note that your answer does not have to address the threats.
Integrity
The CFO did not comply with the principle of integrity. He was not truthful and honest in his dealings with the
court and lied to the court.
Objectivity
The CFO allowed the undue influence of the directors to override his business judgements therefore he was not
objective.
Professional competence and due care
The CFO did not act diligently in accordance with applicable technical and professional standards when he
performed his duties otherwise there would have been no financial irregularities.
Confidentiality
The CFO provided evidence in court proceedings as required by law and he did not use confidential information
obtained from Living Well to his own advantage therefore he complied with the confidentiality principle
Professional behaviour
The CFO lied in court and this might bring discredit to the profession as this is not professional behaviour.
QUESTION 2
Discuss the matters that ISA Incorporated should consider when deciding whether or not to accept
Living Well as a new audit client for the 28 February 2021 year end and possibly any future audits.
1) The integrity of the prospective client’s principal owners and key management
Management is associated with suspicious accounting practices as they have been linked to financial
irregularities.
Living Well has not been audited before but independently reviewed and they may refuse to provide ISA
Incorporated with all the information required to complete the audit.
The directors of Living Well have been accused of authorizing financial irregularities which suggests that
The directors may have been involved in unlawful activities.
if found guilty, it could hamper the business’ ability to continue as a going concern and hamper the ability
of Living Well to pay the auditing fee.
2) The competence of the firm, in terms of its capabilities, time and resources, to perform the audit
satisfactorily.
ISA Incorporated is a medium-size audit firm and their clients are unlisted companies. When Living Well becomes
a subsidiary of a listed company it will have to comply with JSE requirements and regulations. ISA Incorporated is
Downloaded by: Theboredaccountant |
Distribution of this document is illegal
