Accountant Code of Ethics Violation

Questions: 1. a) Katrina Ng is a manager on the audit of a not for profit entity.She is also a member of the Board of Directors for the not for profit entity,but the position is honorary and does not involve her actingin a management capacity for the not for profit firm. b) Peter Beattie , a public accountant , provides tax services, management advisory services,bookkeeping services and conducts audits for the same client .As the firm is small the same person frequently provides all the services .2.a)You have been asked to do the audit for a new client this financial year .While you are satisfied that there appears to be no material misstatements for the information during the current financial year the client will not provide any information about the opening balances of accounts at the start of the financial year.b) You have just started auditing the financial statements of a client which has not been followingthe Australian Accounting Standards since it began operating five years ago. Answers: 1 a) Katrina Ngs Case Katrina has violated the accountants code of ethics because she lacks the auditors independence. By allowing herself to be a member of the Board of Directors, her independence is questioned since she will be easily manipulated by the other Board members when auditing and hence will not give the true position of the company. In this case, the fundamental principle of objectivity will be violated since she will allow undue influence of other Board members to override professional or business judgments. Katrina will violate the principle of integrity which requires her to disassociate herself with reports and communication where she believes the information entails a materially misleading or false statement. This is because she will obscure information needed to be included leading to misleading information. b) Peter Beatties Case Peter Beattie will have violated the accounting code of ethics by frequently providing all services for the same client. This is because there is a possibility of conflict of interests between auditing and bookkeeping services. Peter cannot audit his own work without being biased or omitting some information that may lead to misleading information. He will thus violate integrity principle since he will not disassociate himself from reports that might be misleading to the client. He will also violate the principle of objectivity by allowing conflict of interest to override professional and business judgment. By offering bookkeeping and auditing services, Peter will violate the obligation of objectivity which requires him not to compromise his professional judgment due to conflict of interest. 2. a) I shall have violated the accountants code of ethics by allowing the client not to disclose any information linked to opening balances of accounts at the beginning of the financial year. There is a need to disclose these information as required by the law and ethical practice. This means that I shall have violated the client to override my professional judgment due to his undue influence (Langenderfer and Rockness 2015). Therefore, this will mean that I shall have suspended the principle of objectivity and integrity in my professional practice. I shall have omitted information that are really important to the public and this will compromise my profession as a professional accountant. I need to advice the client to comply with relevant laws and regulation which requires full disclosure of information. b) I shall have violated the accountants code of ethics by allowing myself to audit the financial statements of a client that does not follow AAS. Specifically, I shall have violated professional behavior principle. This principle imposes the obligation for me as a professional accountant to comply with appropriate laws and regulations and to avoid such action that I know or need to know could discredit the profession (Loeb 2014). For example, because this firm has failed to follow the law, I should not offer my services. This is because in doing so, any reasonable and informed thirty party who weighs the particular facts and conditions existing to professional accountants would probably conclude that my actions affect the good reputation of accounting profession. References Langenderfer, H.Q. and Rockness, J.W., 2015. Integrating ethics into the accounting curriculum. Accounting Ethics: Theories of Accounting Ethics and their Dissemination, 2(1), p.346. Loeb, S.E., 2014. Enforcement of the code of ethics: A survey. The Accounting Review, 47(1), pp.1-10.