QUESTION 1(24 marks) The following situations involve potential violation of the general ethical principles as outlined in APES 110 .You are asked to advise whether they involve a violation or not of the ethical principles and if there is a violation explain which ethical principle has been violated and the reason(s)why it is or isnt a violation .

a) Jenny Wang is the Senior Auditor on the audit of Panania Cars Pty Ltd , a large car dealership,a which sells new and used cars .The Sales Manager advises Jenny Wang that there is a sale to long established customers of the car dealership and since she has audited the company for the past six years she can purchase the new cars at a twenty percent discount on the discounted sales price.

b)Katrina Wearne is the auditor on the audit of Lancom Cosmetics .Katrina is auditing the company during November and December 2018 and has been given a Christmas gift of $350 cosmetics from the company .

c)A client requests the assistance of D.Marron ,a chartered accountant ,in the installation of a computer system for maintaining production and inventory records .As Marron has no experience in this type of work he engages a computer consultant who he has confidence in to carry out the review.Due to the highly technical nature of the work Marron is not able to review the computer consultants work and once the client has agreed Marron gives the go ahead for the installation of the computer system.

d)Six small chartered accounting firms have been taking part in a quality assurance working paper review program.Under this review each firm reviews the working papers of another firm and the reviewer discusses the strengths and weaknesses of the audit with the auditor from the other firm.

e)Bill Holland , a chartered accountant ,sets up a casualty and fire insurance agency to complement his auditing and tax services .He doesnt use his own name on anything relating to insurance agency and has a highly competent manager,Simone Taylor, who runs it .Holland often requests that Taylor review the adequacy of the clients insurance with management if the client seems underinsured .

f)Emma Lawrence , a public accountant in a small country town,provides tax services,management advisory services ,bookkeeping services and conducts audits for the same client .Since the firm is small the same person often carries out all the services.