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Grohl Co
Q1(a)(iii) Ethical issues1.Financial controller consider in a position have significant influence to the preparation of FS?not FD?
“If either has joined the audit client as:
(i) A director or officer; or
(ii) An employee in a position to exert significant influence over the
preparation of the client’s accounting records or the financial
statements on which the firm will express an opinion,”2.Tutorial note:
If Bob has deliberately tried to hide his intention to join Grohl Co,what ethical issue will arise to current audit team?3.Q1(b)Matters to consider
Why use the claim amount to calculate the as a percentage of revenue but the claim is only affect the profit?4. Recommended procedure
4th point-why direct contract to the bank by the auditor consider inappropriate for bank loan but asking for the amount claim from the insurance company will be appropriate?1. Financial controller is probably the more “hands on” doer of the preparation of the financial statements – reporting to the FD who reports on all financial and internal control matters to the board.
2. As I have indicated before, I can’t make up additional answer points where tutorial notes suggest that candidates would have got credit for other unspecified points.
3. It is not relevant – this is an old answer – you should disregard.
4. I don’t know what bank loan you are referring to – wherever there is a bank loan at the reporting date it would be covered by a bank confirmation letter.
4. I refers to an audit procedure that the auditor directly confirm with the bank for the loan amount is consider inappropriate audit procedure but asking for the claim from insurance company is appropriate procedure?
Refers to this answer
“Seek permission to contact the insurance provider to enquire as to the status of the claim, and attempt to receive written confirmation of the likelihood of any payment being made”I still do not understand why you say to contact a bank about a loan is an inappropriate procedure – where have you read this?
Aha – NOW I understand that you are talking about a loan application for which a loan would only exist in the FUTURE when agreement is reached – this was not clear.
I think that in fact is the distinction – there is no contract between the client and bank for a future loan. However, there is a contract between the client and the insurance company and, just as the client could ring up and make enquiries about a claim made against that agreement, it is not unreasonable that the auditor could ask to make similar inquiries independently.
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