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Auditing Each of the following suations involves a possible violanion of the Independence Rule of the Code of Professional Conduct for auditors a) Mwape, a

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Auditing

Each of the following suations involves a possible violanion of the Independence Rule of the Code of Professional Conduct for auditors a) Mwape, a sole practitioner, has provided extensive advisory services to one of its aud chent, KDV. Among he advisory services that Mwape has provided are: Interpretation of financial statements, provision of forecasts and other analyses, advising on potential expansion plans, and advising on banking relationships but has not made any management dectsions. KDV is a petvately held enty b) Moono audting and accountancy services, has been aked by hts auds clhent, POPS fumitures, to help implement a new control system. Moono will arrange inmerviews for POPS shiring of new personmel and instruct and oversee the training of current entity's personnel. POPS fumiture is a privately held company. Moono will make all hiring decsions and supervise employees once they are trained KPMG recently won the audit of Kafue textles, a large manufacturer of women's clothing. John one of the partners of KPMG had a substantial ivestment in Kafue textiles prior to badding on the engagement. In anticipation of winning the engagement, John placed his shares of Kafe textiles in a blind ts (an arangemet in which the financtal holdings of a person in an influntial position are placed in the cotrol of a fdactary in order to avaid a possible confict of Interes) Page 2 of 5 d BML audk firm and consultancy is audining Minwood hokdings apartments in which the arnts of Banda a member of the audit rm own a unit and reside. The unit is matertal to the parents' net worth, and Banda is on the audit team that is participating in the engagement. e Solo, a sole practitioner, audited auto woeld's, financial statements for the year ended December 2017 and was tssard stock by the entity as payment of the audit fee. Solo is planning to dispose of the stock before commencing feldwork planning for the audil of the nest year's December 2018 financial statemenes T&T Corporation requires an audit for the current year 2018. However, T & T has not pald Grand Thornton the fees due for tax-related services perfoemed two years agn.In December 2017 T&T ued Grand Thoenton a note for the unpaid fees, and Grand Thomon has peoceeded with the audit services for the current year. a)Far each of the above situations Indicate wh easos, whether each situation violates the Code of independewce and suggest future safe guards (18 marks) ou may present you answer in the format below) Violates oe does not violate Why Violates or why Future safeguardi does ot violate III) Using the American Accounting Association (AAA) model clearly explain the decision that you will reach for oach of the six Scenarios above IV Using the Tucker's model, cloarly axplain the docision that you will roach for each of the six Scenarios above Each of the following suations involves a possible violanion of the Independence Rule of the Code of Professional Conduct for auditors a) Mwape, a sole practitioner, has provided extensive advisory services to one of its aud chent, KDV. Among he advisory services that Mwape has provided are: Interpretation of financial statements, provision of forecasts and other analyses, advising on potential expansion plans, and advising on banking relationships but has not made any management dectsions. KDV is a petvately held enty b) Moono audting and accountancy services, has been aked by hts auds clhent, POPS fumitures, to help implement a new control system. Moono will arrange inmerviews for POPS shiring of new personmel and instruct and oversee the training of current entity's personnel. POPS fumiture is a privately held company. Moono will make all hiring decsions and supervise employees once they are trained KPMG recently won the audit of Kafue textles, a large manufacturer of women's clothing. John one of the partners of KPMG had a substantial ivestment in Kafue textiles prior to badding on the engagement. In anticipation of winning the engagement, John placed his shares of Kafe textiles in a blind ts (an arangemet in which the financtal holdings of a person in an influntial position are placed in the cotrol of a fdactary in order to avaid a possible confict of Interes) Page 2 of 5 d BML audk firm and consultancy is audining Minwood hokdings apartments in which the arnts of Banda a member of the audit rm own a unit and reside. The unit is matertal to the parents' net worth, and Banda is on the audit team that is participating in the engagement. e Solo, a sole practitioner, audited auto woeld's, financial statements for the year ended December 2017 and was tssard stock by the entity as payment of the audit fee. Solo is planning to dispose of the stock before commencing feldwork planning for the audil of the nest year's December 2018 financial statemenes T&T Corporation requires an audit for the current year 2018. However, T & T has not pald Grand Thornton the fees due for tax-related services perfoemed two years agn.In December 2017 T&T ued Grand Thoenton a note for the unpaid fees, and Grand Thomon has peoceeded with the audit services for the current year. a)Far each of the above situations Indicate wh easos, whether each situation violates the Code of independewce and suggest future safe guards (18 marks) ou may present you answer in the format below) Violates oe does not violate Why Violates or why Future safeguardi does ot violate III) Using the American Accounting Association (AAA) model clearly explain the decision that you will reach for oach of the six Scenarios above IV Using the Tucker's model, cloarly axplain the docision that you will roach for each of the six Scenarios above

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