Audit Reporting Going Concern Uncertainty -Myassignmenthelp.Com

Question: Discuss About The Audit Reporting Going Concern Uncertainty? Answer: Introducation According to APES 110 Codes of Ethics for Professional Accountants, Section 130, the auditors are required to take into consideration the limitation of audit profession while to be appointed in the clients company to be the auditors. It creates the obligation on the auditors not to make any false promises to the clients. Thus, Berowra Accountants are not required to give the advertisements for tax refund as they have nothing to do with tax refund. Hence, the principle of professional competence and due care has been violated (Houghton and Campbell 2013). APES 110 Professional Appointment, Section 210 makes the obligation on the auditors to determine the negative effect of their new appointment contract on the principles of audit profession. In this contract, it needs to be mentioned that the athletic clubs are not-for-profit societies in nature. For this reason, according to APES110, there will be no violation of audit principles for Jamie Harveys treasurer position in the athletic club. In addition, this position will not affect the audit of large public corporations. Thus, there will be no violation of ethical principles (William Jr, Glover and Prawitt 2016). APES 110 Principle of Objectivity, Section 120 indicates that the auditors should not compromise their audit judgment or opinion due to any conflict of interest, influence, biasness and others. In this case, the intention of Monlec Ltd can be to obtain favorable audit opinion by making the audit payment dependent on the audit opinion. Pymble Accountants will be breaching the principles of objectivity if they provide favorable audit opinion (Houghton and Campbell 2013). APES 110 Principles of Confidentiality, Section 140 makes the obligation on the auditors to maintain the confidentially aspect of obtained information about the audit clients. Thus, in this provided case, the actions of Winton Accountants have breached the principles of confidentiality of auditing (William Jr, Glover and Prawitt 2016). As per APES 110, Self-review Threat, Section 100.12, it is the obligation on the audit members not to use the audit judgment of previous audit operation done by another audit staff of the same audit firm. For this reason, the intention of Thornleign Accountants about the inclusion of Jane Davis in the audit team for Jenkins Ltd due to her pervious knowledge about the company has created the elf-review heart of audit independence (Wright and Capps 2012). As per APES 110, Intimidation Threat, Section 200.8, it is the obligation on the auditors not to accept any information and financial papers from the audit clients as pressure for delivering favorable audit opinion can be made on them and thus, it is the responsibility of the auditors to obtain conclusive evidence from various analytical procedures. In this case, John Darrow will be responsible for creating intimidation threat by accepting the accounting papers from Winmalee Ltd (Carson et al. 2012). According to APES 110, Self-interest Threat, Section 100.12 bares the auditors from having any financial and non-financial interest in the audit client as it has negative effect on the transparency of auditing. Hence, in this situation, the auditors will be responsible for creating the self-interest threat of audit independence in case they accept the invitation from the chocolate company (Wright and Capps 2012). The given situation shows the weak debt position of the organizations and they are facing difficulties in the repayment of their debts. In addition, the bank wants fast repayment of their loans from the company. At the same time, the auditors have failed to encounter any kind of material misstatements that can affect the materiality of their financial statements. Thus, it can be proven that the company has not tried to hide their weak debt position with the help of any kind of manipulation. Hence, the auditors will provide the company with Unqualified Audit Opinion (Arens, Elder and Mark 2012). In this case, material effect on the companys inventory can be observed due to the adoption of LIFO method instead of LIFO. Apart from inventory, this does not create any material effect on the other financial statements of the company. Thus, the auditors will provide the company with Qualified Audit Opinion by stating the reason for being qualified instead of unqualified (Arens, Elder and Mark 2012). It is the obligation on the companies to make the valuation of their factory and plant on a regular basis for getting the fair market value of them. In this case, the directors of Victorian Manufacturing Company have made an assumption that the market value of their Melbourne factory has not changed over the five years and thus, they have not done the valuation for five years. The financial position of the company can be materially affected in case the assumption of the directors is wrong. Thus, the auditors will provide Disclaimer of Audit Opinion due to lack of evidence (Knechel and Salterio 2016). References Arens, A.A., Elder, R.J. and Mark, B., 2012.Auditing and assurance services: an integrated approach. Boston: Prentice Hall. Carson, E., Fargher, N.L., Geiger, M.A., Lennox, C.S., Raghunandan, K. and Willekens, M., 2012. Audit reporting for going-concern uncertainty: A research synthesis.Auditing: A Journal of Practice Theory,32(sp1), pp.353-384. Houghton, K. and Campbell, T., 2013.Ethics and auditing(p. 354). ANU Press. Knechel, W.R. and Salterio, S.E., 2016.Auditing: Assurance and risk. Taylor Francis. William Jr, M., Glover, S. and Prawitt, D., 2016.Auditing and assurance services: A systematic approach. McGraw-Hill Education. Wright, M.K. and Capps, C.J., 2012. Auditor independence and internal information systems audit quality.Business Studies Journal,4(2), pp.63-84