Audit And Assurance Case Studies

The significant area of concern for Ernest Frank Pty Ltd (Ernest Frank) is the misuse of their confidential company and client information. It appears that Josephine West (West) has used information obtained in the course of her employment with Ernest Frank and used it for the benefit in her subsequent employment with Hale Bopp Pty Ltd (Hale Bopp).

Ethical issues in auditing are situations where individuals have to make a choice from unclear and complex alternatives in auditing, where each alternative may be the right choice according to a specific moral position or viewpoint. (Leung et al.2011)

(P5) Explain the legal and ethical issues in relation to the use of business information

My actions were merely based on ethical duty to my profession and fiduciary responsibility to the users of the financial reports and information provided. Mr. Okumoto’s responsibility was the same. As CFO of an organization, you assume the responsibility of presenting financial information free from material errors and omissions. The users rely on this assurance, therefore if something is incorrectly reported, it must be corrected, no matter the internal consequences. Senior management has a social responsibility as well, the public relies on their honesty and integrity. When either is breached, the consequences in the court of public opinion can be major. Yet, this decision is not an easy or popular

• The high level of managers of the Andersen firm because they didn’t train their auditors well. They may ignore some important ethical principles and only pay attention how to

| To determine if the appropriate person is paid and amount andtime are correct (accuracy and timing).

Their relationship may be strong enough to possibly create a perception that favoritism may or may not exist. Furthermore, transaction during an audit may show that a proper financial evaluation was not conducted on Frank Smith Plumbing.

Jan is faced with a dilemma on whether to disclose the company’s private information to Evelyne in order to help Steve or keep the information to her because it is appropriate as defined by the employee code of conduct. Evelyne approaches Jan informing her of the nephew’s plan to buy a house in proximity to his work place. Jan is aware that the company will engage in downsizing as a measure to lower its cost. Steve is likely to be laid off if the company follows this line of action. Should Jan tell Evelyne of the company’s plan and save her nephew from a likely financial crisis or should she stand by the company and enhance its integrity by practising confidentiality on the sensitive company information?

Further information on the conditions under which disclosures and exploitation may take place is available from the Academic Dean of Manchester

- This case shows a range of breach of fiduciary duties; acting in good faith for a proper purpose in the best interest of the company; conflict of interest and making secret profits. It also showed the inability of the directors to understand the concept of conflict of interest.(Lipton, P.,2003, p.275)

1.) Information Confidentiality: As an employee, you will be exposed to client-sensitive as well as company-sensitive information that is to be viewed only by those who have the authority or permission to do so. Such information to be considered “confidential” includes business contracts, financial information, internal correspondence, and any and all documentation (electronic or paper-based) that is not authorized to be disclosed to the public. Disclosure of sensitive information will lead to immediate termination and possible charges/fines (depending on the severity of the violation) as is legal under state and federal law. Employees should not take advantage of privileged information and share it with our competitors. By leaking confidential information you are threatening the well-being of the company as well as that of our clients. If left unsure of what information is considered confidential, please consult with your direct supervisor, HR Department, or Legal Team for further guidance.

If a firm or approved person engages in any of the activities described in 1 above, the principle may be breached and there may, depending on the facts, also be rule breaches in relation to client confidentiality. For breaches of rules and principles, the FCA can impose a fine and give public censure. Fines are commensurate with the seriousness of the breach and will be determined by reference to the FCA 's usual criteria.

A professional judgment is a key factor in auditing. As a result of development of auditing and accounting industry, especially after a series of accounting fraud and auditing failure cases, such as Enron and Arthur Andersen, in the last decade, professional judgments is becoming a more and more important aspect for the independent auditing industry. Recently, many countries and professional bad issued more strict auditing standards to emphasize to this point. It means the auditor should be required to take broader processes and consider more types of information when he/she doing auditing job. The auditor must be more careful when he/she using professional judgments to identify the risks of material misstatements. At the same time,

The Investment securities Act, unlike CAMA make adequate provisions for the prohibition of insider dealings. Section 111 of ISA provides for the prohibition of insider dealings by insiders including officials other than the directors. The section 315 of the Act provides adequate definition of what insider dealing is and also gives a clear-cut definition of who an insider is.

For purposes of the provisions of Article 9, the Law defines "inside information" to include: "information about a public company or a public fund, which information has not yet been disclosed to the public and which, if disclosed, could have an impact on the price of the securities issued by such public company or public fund."