Auditing
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3102AFE – AUDITING
ASSIGNMENT, SEMESTER 2 2011
1. Determine the facts
Sam is a qualified chartered accountant and has just been made a partner at R&S chartered accountants.
SSSL wants to merge with XYZ software LTD however an unqualified audit opinion is needed to guarantee the merger with XYZ
There are issues regarding the non-current assets fair value, some of the software patents and licenses that may now be impaired
Accountants of SSSL are not up to speed as Sam, there are internal control issues
Sam has re-valued the patents and licenses
Sam has stated he needs more time but has been told by Gary and Daisy to go ahead and sign the audit
Sam is under pressure to sign the audit from three parties; Gary, Daisy and his wife to be
What is he going to do?
2. Define the ethical issues
A) List the stakeholders affected
Sam (his own reputation and personal position)
Gary Rock – Audit partner of R&S, this is a big deal for his company as it will gain his firm a big auditing fee in future, as well as being the supervisor for Sam some of the fault could fall upon him if things do not go smoothly
R&S chartered accountants – the auditors reputation, present and future clients of R&S may be affected.
SSSLs – Shareholders, duty of care owed by auditors to be truthful, show due care and act in an ethical manner
The public at large – as the company (SSSL) is publicly listed, there may be a larger than expected effect if the wrong decision is made
Daisy Wave – As the deputy CEO of SSSL she has a lot at stake in getting this audit complete so that the merger can go through as she will benefit from the merger greatly
XYZ Software LTD – there is a duty owed to third parties, liability may arise, if there isnt sufficient disclosure XYZ could suffer greatly if the companies were to merge
SSSLs Accountants
Competitors – Since two large companies are looking to merge it could have an adverse affect on competing companies.
Other managers