Chapter 12-16

Question 1

What is written representation needed for?

Answer 1

Confirmation management fulfilled duties, and provided all information

Question 2

What are the ethical principles?

Answer 2

PIPCO

Question 3

What is the self interest risk?

Answer 3

Auditor, reluctant to take actions which affect client due owning shares

Question 4

Self review risk

Answer 4

Reluctant to question work done by others in firm for example, audit fs that has been prepped by audit firm

Question 5

Familiarity risk

Answer 5

Reluctance to question work done by a client due to having a close member working in client department for example

Question 6

Advocacy

Answer 6

Taking management side for example, promote client shares in share issue

Question 7

What are the five threats to independence?

Answer 7

Self interest, self review, familiarity, advocacy and intimidation

Question 8

What is the ethical guidance surrounding a self interest threat (fee dependence)

Answer 8

Fee dependence for LTD-
1. If exceeds 10% disclose to those charged with gov
2. If exceeds 15% resigned

Fee dependence for plc
1. If exceeds 5% disclose
2. If exceeds 10% resign.

Question 9

Can you offer accounting services to audit clients?

Answer 9

For nonlisted clients, you can with safeguards and separate teams. For listed clients, you cannot

Question 10

Can you offer Valuation services to clients

Answer 10

For non-listed clients, you are not allowed if material or subjective, if immaterial allowed safeguard
For listed clients you are not allowed if material

Question 11

Can you offer tax calculation for client?

Answer 11

Non listed clients allowed with safeguard
Listed cannot