Examples of Improper conduct.
Proposal Increase of the audit of fee by 25%
BS indicated that Real Education(Pty) Ltd pays the least fees in terms of audit fees compared to Marx & Co Inc’s other clients and therefore making the increase necessary •
This reason given by BS is not a proper basis upon which audit fees should be determined. •
The Code of professional conduct requires that audit fees must be based on Resources to be used on the audit, the level of Expertise needed and the time to be spent on the audit. •
This is therefore in contravention with the CPC and there constitutes an improper conduct.
Blackmailing of the client
BS indicates that an increase in the other professional work received from Real Education (Pty) Ltd will strengthen his hand when he argues the retention of the company to his fellow partners. •
This denotes lack of professional behaviour and brings the profession into disrepute and therefore constitutes an improper conduct.
Omission of the effect of reportable irregularity on the audit report by BS •
It is a requirement of the Auditing Profession Act not to issue an unqualified report if there has been a chance to report irregularities. •
If the reportable irregularity affects fair presentation then the auditor must qualify the report in accordance with ISA 705 •
If the reportable irregularity does not affect fair presentation but exists, the audit report must be modified by inclusion of an additional paragraph in the audit report •
Ignoring the impact of reportable irregularities on the audit report is therefore in contravention of the APA and therefore an improper conduct.
Failure to maintain confidentiality
BS is always willing to share problems experienced by other clients with Real Education (Pty) Ltd. •
A disclosure of confidential information is only permitted -when it is permitted by law and is authorised by the client or employer -Required by law to provide evidence in the course of a legal...
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