Question 1 PART A (20marks)(16marks) Mr Hop is a partner in the auditing practice of Hop, Skip and Jump, a medium-sized firm based in Ondangwa. He has asked your advice as to whether any of the circumstances listed below are a breach of the Code of Professional Conduct as set out by the SA Institute of Chartered Accountants/ICAN. 1. The firm of Hop, Skip and Jump have accepted the audit of International Ltd, knowing that they do not have the necessary skills and expertise required to complete it properly on their own. They have decided to engage an outside expert in those areas where they feel that their skills and expertise are lacking. 2. Mr Skip has disclosed confidential information about a client company, Omega Ltd. He did this when required to give evidence in the course of legal proceedings and after advising Omega Ltd of his intended actions. 3. Mr Jump has recently had major alterations done to his house and has raised a loan from Credit Bank Ltd, an audit client of the firm. 4. The practice accepted a commission from Insurance Ltd after one of their audit clients had, on the practice's recommendation, taken out extensive cover with the insurance company. 5. Hop, Skip and Jump intend paying a commission to their attorney as a "thank you" for introducing a new audit client. 6. Mr Jump intends buying shares in an audit client, Holdings Ltd, a large public company. Mr Jump is not directly involved in providing professional services to Holdings Ltd. 7. Hop, Skip and Jump intend quoting a fee, (substantially lower than was previously charged) to a potential new client Fixit (Pty) Ltd. a) In order to enlarge their client base, the practice intends sending a letter to prospective new clients setting out all the services offered by Hop, Skip and Jump. b) Mr Hop intends making a visit to a Ondangwa high school for the purpose of recruiting trainee accountants for the practice. YOU ARE REQUIRED TO: For each circumstance listed above, indicate whether or not the effect on the Code of Professional Conduct is 2Page (a) a breach, (b) not a breach or (c) indeterminate due to insufficient information being provided. If the information provided is insufficient, give details of the additional information which you would require. PART B (4 marks) One of the statutory duties of Registered Auditors is to report reportable irregularities encountered whilst performing their duties as auditors of companies. YOU ARE REQUIRED TO: Set out the precise steps the auditor should follow when reporting reportable irregularities as required by Section 45 of the Auditing Profession Act