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In this qs relating to part a)is it correct to comment that chester co should be extremely careful while auditing the fin statements of tetbury co as it has already been investigated by financial services authority for alleged non compliance with its regulations.any mistake from Chester company’s part in the audit would only invite further investigation which would hamper the reputation of the audit firm as the financial services authority would be closely observing tetbury company.
Can this ans be regarded as a professional issue?
Your proposal implies that it’s acceptable to exercise a degree of care less than extremely careful if there’s a good chance that no-one is going to scrutinise your work
Is it correct that you are more careful than normal when you think someone is going to be watching you closely?
Personally I believe that you’re skating on thin ice with that proposal
However, in making a decision about whether to accept Tetbury’s invitation, Chester should pay great attention and give due weight to the fact that the Tetbury management might be considered “obstinate”? Accounting treatment of commission earned is not normally a matter for contention and a disagreement between an auditor and a client would, 999 times out of a 1,000, most likely indicate that the client is incorrect
Auditors are not in the habit of resigning unless there are very good reasons for doing so, so an approach by a potential client for whom the previous auditors felt they could no longer provide a service should ring warning bells in the minds of the Chester partners
Additionally,. the reasons for the previous auditors’ resignation have been described to Chester only by the Tetbury management. We should go no further until we have heard from the previous auditors
More careful because we’re being watched? I don’t think so
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