Question 1: (20 marks)

Suppose you are a senior manager in Amex & Co, a small firm of Chartered Certified Accountants, which specializes in providing audits and financial statement reviews for small to medium-sized companies. You are responsible for evaluating potential assurance engagements, and for producing a brief report on each prospective piece of work to be used by the partners in your firm when deciding whether to accept or decline the engagement. Amex & Co. is keen to expand the assurance services offered, as a replacement for revenue lost from the many smallcompany clients choosing not to have a statutory audit in recent years.

Dura Co has been an audit client of Amex & Co. for the past three years. The company owns and operates a chain of retail outlets selling pet supplies. The finance director of Dura Co. recently communicated with your firm to enquire about the provision of an assurance report.

Required: You must need to understand this scenario before answering the question. Your answer must be tailored to the scenario. It is pointless, for example, to write about a general acceptance issue which is not specifically related to Dura Co. You need to discuss the importance of assurance services for Dura Co. Also classify assurance services that involve attestation and you will include in your report

Question 2: (20 marks)

A series of financial scandals revealed a key weakness in American business model. The failure of the U.S. auditing system delivers to true independence. Audit independence is important so that auditors opinion can be unbiased, free from undue influence or conflicts of interest to override the professional judgement.

Required: Explain the concept of independence and discuss the broad categories of threats to independence with examples.

Question 3: (20 marks)

The PCAOB adopted the AICPA auditing standards in existence April 16, 2003, as its interim standards. The PCAOB began issuing its own series of Auditing standards that are structured AICPA standards previously referred to as the generally accepted auditing standards.

Required: Explain briefly PCAOB ten Auditing standards, which grouped into three categories? Discuss the importance of these standards for any auditing profession.

Question 4: (20 marks)

Toshiba, one of Japans oldest and most respected companies, in 2015 the leaders pushed its many business units to meet aggressive targets for revenue and profitability. When circumstances rendered those goals doubtful, managers of those business units altered the books to provide the illusion they had met their performance goals.

Required: Refer to above scenario identify and discuss the responsibility of auditors for detecting misstatement in financial statements.

Question 5: (20 marks)

Toshiba, a 140-year-old pillar of Japan Inc, is caught up in the country's biggest accounting scandal since 2011. In 2011, Olympus Corp was embroiled in a scandal. In July 2015, Toshiba Corp president Hisao Tanaka and his two predecessors quit after investigators found that the company inflated earnings by at least $1.2 billion during the period 2009-2014.

1. Refer to above Toshiba case what do you think about the importance of audit in certain situation? Also, explain why audits are demanded by society under such condition.
2. Importance of Professional Skepticism in auditing process refer to above Toshiba case.