FBA/PAS3143/APRIL20 SECTION A: STRUCTURED QUESTIONS (100 MARKS) ANSWER ALL QUESTIONS QUESTION 1 (20 MARKS) a. During the financial year ended 31 December 2019, the amount of audit and non- audit fees paid by Happy Sdn. Bhd. to Razif & Partners are as follows: Audit services Non-audit services RM28,000 RM18,000 The amount incurred in respect of non-audit fees comprises of tax consultation and internal control review on procurement system. Required: Discuss whether the practice above is permitted from the view of MIA By-Laws (On Professional Ethics, Conduct and Practice). (5 marks) b. Azman Partners has been appointed as Silky Bhd.'s auditor for 10 years. In add there was also a self-interest threat arising due to the fact that the fees for other engagements significantly exceeded the audit fees in the relevant years, by which Azman Partners failed to consider properly. In addition, the Ex-Chief Financial Officer (CFO), Sam claimed that there was no red flag raised to Silky's board on financial irregularities in the company. Sam told the court that while he was the CFO, neither the company's internal auditors nor external auditors had issued a letter to the management alerting on the accounting irregularity issue that was brewing in Silky Bhd. Required: Assess the ethical issues and potential liabilities which might be faced by Azman Partners from situation above. Suggest the ethical conducts that should be practised by Azman Partners as a certified auditor. (15 marks) CONFIDENTIAL/2 FBA/PAS3143/APRIL20 SECTION A: STRUCTURED QUESTIONS (100 MARKS) ANSWER ALL QUESTIONS QUESTION 1 (20 MARKS) a. During the financial year ended 31 December 2019, the amount of audit and non- audit fees paid by Happy Sdn. Bhd. to Razif & Partners are as follows: Audit services Non-audit services RM28,000 RM18,000 The amount incurred in respect of non-audit fees comprises of tax consultation and internal control review on procurement system. Required: Discuss whether the practice above is permitted from the view of MIA By-Laws (On Professional Ethics, Conduct and Practice). (5 marks) b. Azman Partners has been appointed as Silky Bhd.'s auditor for 10 years. In add there was also a self-interest threat arising due to the fact that the fees for other engagements significantly exceeded the audit fees in the relevant years, by which Azman Partners failed to consider properly. In addition, the Ex-Chief Financial Officer (CFO), Sam claimed that there was no red flag raised to Silky's board on financial irregularities in the company. Sam told the court that while he was the CFO, neither the company's internal auditors nor external auditors had issued a letter to the management alerting on the accounting irregularity issue that was brewing in Silky Bhd. Required: Assess the ethical issues and potential liabilities which might be faced by Azman Partners from situation above. Suggest the ethical conducts that should be practised by Azman Partners as a certified auditor. (15 marks) CONFIDENTIAL/2
