This course Guides Quick links Case Study (50 marks: 90 minutes) AmaZulu Inc. ("AZ") is a large auditing firm based in Pietermaritzburg. The firm was founded in 1992 and has grown its clientele to include small businesses as well as JSE-listed clients. Recent accounting scandals and audit failures in South Africa and around the world have led to the firm strengthening its internal quality assurance and risk management processes. One of these changes is the creation of a new position: Head of Risk and Quality Assurance. You saw the job advertisement for this position on Linkedin and decided to apply. You comfortably met all of the minimum requirements for the position as a qualified Chartered Accountant with 8 years of senior management experience in the audit environment. Your application and subsequent interview for this position were both successful, and you began your new position on June 1, 2021. On your first day on the job, the firm's CEO. Mr. Gumede Titus said to you, "We recognize the context in which we operate in the modern economy." We are fully aware of the developments in the auditing profession, as well as the failures that have harmed auditors' good reputation in South Africa. We want to do our part to restore public trust in the work of auditors. That is why we brought someone like you on board. We look forward to working with you to strengthen our risk and quality control processes. Your first task is to address several ethical issues that currently exist within AZ's various audit engagements. The following are some of the current cases that the firm is dealing with Situation 1: Agrotech (Pty) Ltd is an agricultural company that specializes in the production and distribution of agricultural preservatives. The Tongaat-based company has been an AZ audit client for four years. Sam Steyn, the current Audit Manager on this audit, was the Financial Manager of Agrotech (Pty) Ltd until joining AZ on May 1, 2021, Situation 2: AZ typically hires trainees who are still completing their CTA (Honours) studies- often via the part-time (distance learning) route. One of AZS audit clients has offered to pay the university tuition fees of all trainees still pursuing their CTA qualifications According to the audit client, this is part of their corporate social responsibility program Situation 3: me Learn 2021 https://sc.ukzn.ac.za Mail-Nhlanhlientie Dashboard Events My courses This course Guides Quick links Situation 2: AZ typically hires trainees who are still completing their CTA (Honours) studies-often via the part-time (distance learning) route. One of AZ's audit clients has offered to pay the university tuition fees of all trainees still pursuing their CTA qualifications. According to the audit client, this is part of their corporate social responsibility program. Situation 3: As part of auditing the company's compliance with the Companies Act, 71 of 2008, one of the trainees on the audit of LedEx (Pty) Ltd was tasked with inspecting the minutes of directors' meetings. During her review of these minutes, she discovered that there are plans to purchase a new office building in order to relocate their corporate headquarters. The budget for this acquisition was R15,7 million. Knowing that her uncle is a major property investor in Pietermaritzburg she decided to share 'inside information about the upcoming tender with him. Situation 4: For some time. Ytech Engineering (Pty) Ltd, which is AZ's second-largest audit fee client, has been experiencing financial difficulties. As a result of the COVID-19 pandemic and the resulting national lockdowns, their financial situation rapidly deteriorated. The company has failed to pay audit fees to AZ for the past two years. The directors of vtech Engineering (Pty) Ltd have now offered to settle the debt by giving AZ a 35% stake in the company... Required: a) Using information provided in the case study, apply the conceptual framework approach to discuss the ethical issues (threats) present in Situation 1 to Situation 4. (12 marks) 4 b) Provide two possible safeguards that can be applied to reduce the threat to an acceptable level, (8 marks) 2022.ukzn.ac.za... DStv Learn 2022 This course Guides Quick links Case Study (50 marks: 90 minutes) AmaZulu Inc. ("AZ") is a large auditing firm based in Pietermaritzburg. The firm was founded in 1992 and has grown its clientele to include small businesses as well as JSE-listed clients. Recent accounting scandals and audit failures in South Africa and around the world have led to the firm strengthening its internal quality assurance and risk management processes. One of these changes is the creation of a new position: Head of Risk and Quality Assurance. You saw the job advertisement for this position on Linkedin and decided to apply. You comfortably met all of the minimum requirements for the position as a qualified Chartered Accountant with 8 years of senior management experience in the audit environment. Your application and subsequent interview for this position were both successful, and you began your new position on June 1, 2021. On your first day on the job, the firm's CEO. Mr. Gumede Titus said to you, "We recognize the context in which we operate in the modern economy." We are fully aware of the developments in the auditing profession, as well as the failures that have harmed auditors' good reputation in South Africa. We want to do our part to restore public trust in the work of auditors. That is why we brought someone like you on board. We look forward to working with you to strengthen our risk and quality control processes. Your first task is to address several ethical issues that currently exist within AZ's various audit engagements. The following are some of the current cases that the firm is dealing with Situation 1: Agrotech (Pty) Ltd is an agricultural company that specializes in the production and distribution of agricultural preservatives. The Tongaat-based company has been an AZ audit client for four years. Sam Steyn, the current Audit Manager on this audit, was the Financial Manager of Agrotech (Pty) Ltd until joining AZ on May 1, 2021, Situation 2: AZ typically hires trainees who are still completing their CTA (Honours) studies- often via the part-time (distance learning) route. One of AZS audit clients has offered to pay the university tuition fees of all trainees still pursuing their CTA qualifications According to the audit client, this is part of their corporate social responsibility program Situation 3: me Learn 2021 https://sc.ukzn.ac.za Mail-Nhlanhlientie Dashboard Events My courses This course Guides Quick links Situation 2: AZ typically hires trainees who are still completing their CTA (Honours) studies-often via the part-time (distance learning) route. One of AZ's audit clients has offered to pay the university tuition fees of all trainees still pursuing their CTA qualifications. According to the audit client, this is part of their corporate social responsibility program. Situation 3: As part of auditing the company's compliance with the Companies Act, 71 of 2008, one of the trainees on the audit of LedEx (Pty) Ltd was tasked with inspecting the minutes of directors' meetings. During her review of these minutes, she discovered that there are plans to purchase a new office building in order to relocate their corporate headquarters. The budget for this acquisition was R15,7 million. Knowing that her uncle is a major property investor in Pietermaritzburg she decided to share 'inside information about the upcoming tender with him. Situation 4: For some time. Ytech Engineering (Pty) Ltd, which is AZ's second-largest audit fee client, has been experiencing financial difficulties. As a result of the COVID-19 pandemic and the resulting national lockdowns, their financial situation rapidly deteriorated. The company has failed to pay audit fees to AZ for the past two years. The directors of vtech Engineering (Pty) Ltd have now offered to settle the debt by giving AZ a 35% stake in the company... Required: a) Using information provided in the case study, apply the conceptual framework approach to discuss the ethical issues (threats) present in Situation 1 to Situation 4. (12 marks) 4 b) Provide two possible safeguards that can be applied to reduce the threat to an acceptable level, (8 marks) 2022.ukzn.ac.za... DStv Learn 2022