SOALAN 1/ QUESTION 1 (Sem 1 2017/2018)

You are an audit manager of Noh and Eun, a firm of Certified Public Accountants. You are assigning staff to the final audit of Golding Bhd (Golding), a conglomerate listed on Bursa Malaysia, for the year ended 31 December 2017. You are aware of the following matters:

Your firm acts as an auditor and adviser to Golding and to its four directors. 50% of Golding is owned by Mr Cha which is the chief executive, while the remaining 30% is owned equally by his wife Ms Bok and Mr. Louise, the finance director. Mr Louises sister, Ms May, has recently resigned from the executive board, following a series of disagreements with Mr Cha. Ms May has now formed her own company, Platinum Sdn. Bhd. (Platinum), in competition with Golding. Ms May is currently negotiating with her former co-executives the profit-related remuneration due to her and the sale of her 15% holding of shares in Golding to one or all of them. Ms May has contacted you to find out Mr Chas current remuneration package since he refuses to disclose this to her. She has also requested that your firm should continue to act as her personal adviser and become auditor and adviser to Platinum.

Earlier, Mr Cha has recently issued profits warning (a statement issued by a company advising the stock market that profits will be lower than expected). The company has announced that the expected synergies from the accusation of Copper Sdn Bhd (Copper), a former competitor company have not materialised. Moreover, it has emerged that certain of Coppers assets are significantly impaired. Your firms advisory department assisted by two audit trainees, carried out due diligence (non-audit services) work on behalf of Copper before the purchase of Copper was completed in December 2016.

Ameer, an audit senior, has been assigned to audits of Golding since joining the firm nearly four years ago. He has confided to you that his father owned 1000 shares but sold them only days before the profits warning at share price of RM10. You are assured that Ameer previously known that his father had the shares. In June 2016, Maria, assistant audit manager joined Noh and Eun. She assigned to the interim and final audit of Golding. She has inherited 5,000 (RM1) shares in Golding. Maria told you that she has no intention of selling the shares until the share price recovers from the fall to RM1.50 which followed the profit warning

During the annual physical count of fashion clothes at one of the Goldings business segment, the audit staff attending the count at the principal warehouse were invited to purchase any items of clothing or equipment at 30% of their recommended retail prices.

Dikehendaki/Requirements:

Bincangkan isu-isu etika yang dibangkitkan dan tindakan-tindakan yang mungkin diambil oleh juruaudit berhubung dengan perkara-perkara ini.

Discuss the ethical issues raised and the actions which might be taken by the auditor in relation to these matters.

(20 markah/marks)

[Jumlah/Total:20 markah/marks]