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- This topic has 1 reply, 2 voices, and was last updated 6 years ago by Ken Garrett.
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- April 19, 2018 at 9:39 pm #448183
you are an audit manager of Miranada and Co and you are planning audit of Milberry co which has been an audit client for 4 years and specializes in manufacturing luxury handbags. Te audit senior has recently resigned and is now employed as financial controller of Milbery. During planning stage of audit you have obtained the following information. The employees of Milberry are entitled to purchase handbags at 40% discount. The audit team has been offered the same level of staff discount. From a review of the correspondence file you note that the partner and the finance director have known each other socially for many years and infact went on holiday together last summer with their families. As a result of this friendship partner has not yet spoken to the client about the fee for last years audit, 20% of which is still outstanding.
Which is most appropriate response with respect to discount offered by Milberry to audit team.
a) discount may be accepted as it is the same as that offered to the clients employees
b) discount should be rejected as it is unlikely to be a trivial monetary amount.Sir correct ans is B, but why the answer cannot be A?
April 20, 2018 at 7:44 am #448226A 40% discount on the price of a luxury handbag can be a lot of money. Gifts (like this is, essentially) and entertainment can only be accepted if trivial (as it says in (b)).
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