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Welcome to our Presentation. Comprehensive Review on Ethical Dilemma in A&P. HKSA Case Competition. Introduction of Core Principles. Analysis and Recommendations of Ethical Issues. Conclusion. Presentation Flow. PART I: Non-Compliance Acts Investigation by ICAC.

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  1. Welcome to our Presentation Comprehensive Review on Ethical Dilemma in A&P HKSA Case Competition

  2. Introduction of Core Principles Analysis and Recommendations of Ethical Issues Conclusion Presentation Flow PART I: Non-Compliance Acts Investigation by ICAC PART II: Conflict of Interests Undue Dependence

  3. Objectivity Independence Confidentiality Core Principles (SAS 100 para. 6)

  4. ? ? ? ? ? Overstatement in labor costs Issue 1 : Suspected non-compliance Comparing Cost Reports and Tender Estimates ?

  5. Collect & examine audit evidence Recommendations Discovery of suspected non-compliance Check financial statements - Real figures reported? Document the findings Discuss with Management Suggest remedial actions

  6. Do not involve senior management Involve senior management Report to Clients Report to senior management Non-compliance acts Report to audit committee

  7. Internal Control Memorandum Evidence of suspected acts Internal Control Memorandum Evaluation of risk exposure Recommendations for remedial actions

  8. Materiality of non-compliance Effect on whole financial statement Remedial action of management Quality and reliability of evidence Audit Report Audit Opinion

  9. LAST RESORT SAS 600(42) WITHDRAWAL of ENGAGEMENT?

  10. Client’s information for investigation Bribery? Duty of a citizen Duty of an auditor Issue 2 : ICAC Investigation

  11. Recommendation (SPE 1.204B) Duty of confidence owed to clients Lack of authority of David’s investigation Clients Alan should NOT disclose CE’s information

  12. Robin’s son Susan HT CE Robin Robin’s wife Remaining Issues

  13. Alan, Manager-in-Charge HT CE Issue 3 : Independence

  14. Recommendation CE’s project: HT’s project:

  15. HT CE Susan A & P 10% of A&P’s revenue Issue 4: Undue Dependence

  16. 15% Recommendation (SPE 1.203(4)) Revenue Close monitor

  17. investing Robin’s wife Issue 5 : Robin’s Wife Investing

  18. Confidential information of clients Executive decision making Recommendation Major shareholder

  19. attractive rent? normal course of business? Tenancy Agreement SPE 1.203(34) Issue 6 : Tenancy Arrangement Susan A & P

  20. Robin’s son Susan Issue 7 : HT Computer Project (Robinson)

  21. Conclusion Professionalism Independence Objectivity Confidentiality Integrity

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