SOALAN 3/ QUESTION 3 (Sem II 2016/2017)

You are an audit supervisor working for Azman & Hashim, a large audit firm. You have recently

been seconded to work within the firms ethics department. The ethics partner has asked you to review the following situations arising on four (4) unrelated external audit clients.

Ms. Hilary Duff is an audit partner in Azman & Hashim. She is the lead partner for the firms largest client, The American Beauty Corporation. Ms. Lady Gaga, who works in the same office as Ms. Hilary Duff, has a sister who is the controller for The American Beauty Corporation. Because of potential independence issues, Ms. Lady Gaga does no work for The American Beauty Corporation. Ms. Lady Gaga is being considered for promotion to partner. What independence issues should Ms. Hilary Duff consider before promoting Ms. Lady Gaga?

The engagement partner has notified the ethics partner that the fee for the audit for the year ended 31 December 2016, which was due on 30 April 2017, remains unpaid. Audit work on the financial statements for the year ended 31 December 2017 has commenced.

30% of the ordinary share capital of Ziggy Corporation was recently acquired by Blossom Corporation. Peter Andre is the engagement partner responsible for the audit of Ziggy Corporation and he has notified the ethics partner that Susan Sarandon, his wife, is a director of Blossom Corporation.

The audit manager responsible for the audit of the financial statements of Fabulous Corporation, a listed company, has held the position continuously for eight years. The firms engagement quality control reviewer has requested that the audit manager be removed from the audit immediately, but the engagement partner does not believe this is necessary.

Dikehendaki/Requirements

(i) Berikan definasi skeptisisme profesional. Bincangkan implikasi skeptisisme profesional dalam audit/Define professional scepticism. Discuss the implication of professional scepticism in audit. (5 markah/marks)

(ii) Gariskan prosedur kawalan kualiti yang sebuah firma audit perlu amalkan untuk menyediakan jaminan yang munasabah bahawa kakitangannya dapat menjalankan tugasan audit dan mengekalkan kemerdekaan/Outline the quality control procedures that an audit firm should adopt in order to provide it with reasonable assurance that its personnel, undertaking audit engagements, maintain independence.

(3 markah/marks)

(iii) Kenalpasti dan jelaskan ancaman utama kepada objektiviti yang dibentangkan oleh setiap situasi di atas. Jawapan anda hendaklah menyenaraikan, dengan sebab, apa-apa maklumat pasangan etika yang perlu dipertimbangkan sebelum mencapai kesimpulan pada setiap keadaan dan nyatakan bagaimana syarikat anda perlu mengurangkan ancaman yang dikenal pasti/Identify and explain the principal threats to objectivity presented by each of situations above. Your answer should list, with reasons, any additional information the ethics partner should consider before reaching a conclusion on each situation and state how your firm should mitigate the threats identified. (12 markah/marks)

[Jumlah/Total:20 markah/marks]