- This topic has 1 reply, 2 voices, and was last updated 4 years ago by
.
- Posts
Dear sir,
1) I relation to “(ii) Petty cash fraud”, in marking scheme of the suggested answer, it is mentioned that “Illegal act represents non-compliance with legislation and may be further indication of weak control environment”. Petty cash fraud represents non-compliance with legislation as it can be assumed same as Money Laundering?
2) I relation to “(ii) Petty cash fraud”, in marking scheme of the suggested answer, it is mentioned that “Threat to auditor independence represents possible non-compliance with ethical code and ISA 260” This ISA reference of ISA 260 is wrong and it should be referred to ISA 250?
3) In relation to “(iv) Tax advice”, Assistance from an audit assistant who is very junior in audit team really creates big trouble for it to be a self-review threat to objectivity of the audit team? The audit assistants and their work are always supervised and reviewed by the on-field audit supervisor, which is then reviewed by audit manager.
4) In relation to “(iv) Tax advice”, The amount of the tax calculation is not given for it to be material. Can we assume that tax payable amount is always material in exam as it is around 20% of profit?
5) In relation to “(iv) Tax advice”, Is it a good practice to report the competence of Finance Director to TCWG as he must be qualified enough to be a Finance Director of a listed company?
6) In relation to “(iv) Tax advice”, Should we also report the implications of the lack of competence of Finance Director for the recruitment and training procedures at the client as he may hire and train incompetent staff?
Thank you sir for your clarifications !
1. Theft is a criminal act – it is not the same as money laundering.
2. Per answer it is 260 Communication with TCWG.
3. A threat is identified – then assessed – in order to decide on appropriate response see beginning of s.3 and s.4 in the notes. You have to consider that even the “reasonsable and welll informed third party” may not appreciate the level of an auditor assistant – if it’s reported as “auditor gives client tax advice” the audit firm would not appear to be independent.
4. If the service is to determine the tax expense/liability in the financial statements then yes. (Hence prohibition for PIE clients.)
5. Clearly this is an unlikely scenario in the real world but those who hold high office cannot always be assumed to be competent.
6, I think that is speculation.
- You must be logged in to reply to this topic.