Auditing and Ethical Business Practice †Myassignmenthelp.Com

Question: Discuss about the Auditing and Ethical Business Practice. Answer: As per section 100.2 of APES 110, the code of ethics is being specified so far threat and subsequent safeguard is concerned to mitigate such threats or reduce it to certain satisfactory level in order to ensure maximum level of acceptable result. As the auditors are deployed with the mission of serving public interest, especially with the stakeholders, detection of threat and subsequent safeguard measures are necessary for the interest of the stakeholders. Code 100.2 has three parts. While part A is emphasizing on-a) identification of threat to ensure compliance of basic principles; b) evaluation of the threats identified; and c) application of safeguards to mitigate the threats to reasonable level. The role of conceptual framework of accounting practices plays a vital role in this aspect. As per 100.3 Code of Ethics of accounting professionals, it is suggested that the professionals should look for suitable instances of safeguards which may be fit for combating those threats. The safeguard should be considered keeping in mind the stakeholders and their level of affectedness with the threat(Apesb, 2010). Intending Accountant: The threat with this issue is leakage of information of HCGC group which is defined as Self Interest Threat under code 100.12(a). The accountant, because of holding share of HCGC will obviously try to find out the financial condition of the company, as his direct interest is linked with that due to his role of shareholders of HCGC. IF the financial position of the group is found stable and lucrative for investment, the information may be passed on to third parties who may cause abnormal trading of the stock of the group. It is mere personal interest which may be instrumental. The declaration of audited financial and accounting report of the group is expected to be declared in the Annual General meeting of the company for the year ended. Before that the report or its extract should not be leaked out to prevent the interest of the other shareholders. Even the threat is not material to the CEO of TCCL, the audit firm has to give proper importance to this threat to ensure professional an d ethical deliverance to the stakeholders of the group by whom the audit firm is appointed. Safeguard: To safeguard this threat, the management of the audit firm can take decision in two ways- a) not to assign the task to that accountant, or b) to confine that personal within such area from where he cannot access the final stage report which may be instrumental for making investment decision. It is the prime responsibility of the leader of the audit team to ensure integrity of the firm with the professional and ethical behavior for the sake of the stakeholders of the group. To ensure that, Tania, the audit firm partner has to take proper action which is deemed fit to comply with professional ethics as described in APES 110 Code 100.16. This code of conduct ensures ethical behavior of the participating identities with the role of accountant deployed by the audit form. Safeguard should be in the form of well understood and notified system of deliverance with compliance of ethical behavior which is built by the legislation, profession of accounting, or by the employing authorities or reg ulatory authority(Iknow, 2013). Evaluation of intellectual property: The occurrence of evaluation of intellectual property by the audit firm attracts the threat which is falling under Self- Review Threat as per 100.12(b) of APES 110. The evaluation of intellectual property is falling under the evaluation of intangible assets. As these assets cannot be viewed or valued with material substance, the application of professional expertise is needed. Intellectual property can even be valued with the concept of patent valuation or copy right valuation. If the same intellectual property cannot be covered under patent or copy right evaluation, it is the sole discretion of the audit firm to endorse the value of intellectual property as declared by the company. Intangible asset is categorized as long term asset and this evaluation makes material to the financial health of the organization. This evaluation inflates the consolidated financial position of the group and thus projects financial stability of the group(Cpaaustralia, 2014). As this threat is caused with the conflict of evaluating intellectual property, 100.18 and 100.19 of APES 110 provides respective safeguard through depending upon relevant facts, basic principle related to this matter, standard internal system or alternative course of action by inviting the involvement of the Board of Directors or the Audit Committee by seeking their valuable suggestions(Apesb, 2013). References: Apesb. (2013, November). Amendments to APES 110 Code of Ethics for Professional Accountants due to revisions to IESBAs Code of Ethics for Professional Accountants. Retrieved December 29, 2016, from Apesb: https://www.apesb.org.au/uploads/standards/apesb_standards/amendingt3c1.pdf Apesb. (2010, December). APES 110 Code of Ethics for Professional Accountants. Retrieved December 29, 2016, from Apesb: https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf Cpaaustralia. (2014, April). An overview of APES 110 code of ethics for professional accountants . Retrieved December 29, 2016, from Cpaaustralia: https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/ethics/an-overview-of-apes-110-code-of-ethics.pdf Iknow. (2013, November 14). APES 110_Amended 2013_2 Amendments to APES 110 Code of Ethics for Professional Accountants due to revisions to IESBAs Code of Ethics for Professional Accountants. Retrieved December 29, 2016, from Iknow: https://www.iknow.cch.com.au/#!/document/atagUio2512483sl591724094/apes-110-amended-2013-2-amendments-to-apes-110-code-of-ethics-for-professional-accountants-due-to-revisions-to-iesba-s-code-of-ethics-for-professional-accountants