question archive PROBLEM CASES : 1) For each cases , state whether the action or situation shows violation of the Revised Code of Ethics for Professional Accountants in the Philippines, explain why, and cite the relevant rule and interpretation
PROBLEM CASES : 1) For each cases , state whether the action or situation shows violation of the Revised Code of Ethics for Professional Accountants in the Philippines, explain why, and cite the relevant rule and interpretation
Subject:AccountingPrice:2.86 Bought5
PROBLEM CASES :
1) For each cases , state whether the action or situation shows violation of the Revised Code
of Ethics for Professional Accountants in the Philippines, explain why, and cite the relevant rule and
interpretation .
?c. Kier Penales is an audit partner of a one-office accounting firm of Penales and Reina & Co. The firm has a total of 7 partners and 26 other professional accountants. Penales and Reina &
Co. audits Abalos Bank and Kier sister, Amelia has just taken a job Vice-President for Finance
And in charge of preparing the bank's financial statements. Maita Reina is concerned about independence since the bank plans to become a holding company and file statements with SEC.
3. Jose Dizon, CPA was engaged to audit financial statements of Victory Corporation . Dizon had half-completed the audit when he has a dispute with management of Victory Corporation and was discharged. Helen Sison , CPA was promptly engaged to replace Dizon . Victory Corporation
Did not compensate Dizon for his work to date; therefore, Dizon refused to allow Victory Corporation's management to examine his working papers. Certain of the working papers consisted of adjusting journal entries and supporting analysis. Victory Corporation's management had no other source of this information. Did Jose Dizon violates the Revised Code of Ethics for Professional Accountants. Explain and justify fully your answer.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
CASE 1.
Answer
The actions under case 1 above violates the Revised Code of Ethics for Professional Accountants in the Philippines.
Reason
The fact that Kier sister, Amelia , is the new Vice-President for Finance And in charge of preparing the bank's financial statements compromises the objectivity of Kier Penales is an audit partner in forming a non - biased audit opinion due to personal relationship threat and familiarity threat based on the fact that the financial statements are prepared by his sister which increase the chances of delivering a biased audit opinion.
Rule violated
The code of objectivity ;This is an unbiased mental attitude that allows the auditors to perform audit engagements without any form of quality compromises.
CASE 2
Answer
The actions under case 2 did not violate the Revised Code of Ethics for Professional Accountants in the Philippines.
Explanation
The auditors' working papers are their legal property, and they have the right to restrict or decline access to them by the
client. This is because , the auditor is an independent contractor and not the agent of the client .
The auditor can however grant access to their working papers if they wish to be of assistance to the client or not to in order
for need to protect themselves from possible litigation in future.
Jose Dizon, CPA can chose to share the working papers with Victory Corporation management upon compensation for the
unfair dismissal or not to share the working papers at all to protect themselves against any future legal suits.
