Question

After two weeks away, you return and walk into Joshua’s office. Joshua starts to fill you...

After two weeks away, you return and walk into Joshua’s office. Joshua starts to fill you in on the last two weeks. Welcome back! I trust your vacation was amazing. Things have really been happening while you’ve been gone. Let me fill you in on the highlights.

1) We were issued a subpoena regarding a lawsuit with Ajax Corporation. You remember – the one where the company defaulted on the loan. We quickly typed up a response and informed them of our need to respect client confidentiality. We included the statement that we will not be providing any information in regards to this lawsuit.

2) We accepted a TTL Limited as a new client. As you know, Jeremy’s wife is the CFO at TTL and she called last week to ask for a quote on performing a year-end audit. Due to the independence issue, Jeremy let me speak to her and I gave her a quote for performing the year-end audit. This is such a great opportunity for us! I based the fee on the amount we charged a similar client. I expect the fee will be a little low this time around, but we can increase it for next year.

3) We sent out a brochure to the major public companies in town, letting them know that our firm is “the best in the region”. You should see the brochure – it looks great!

4) Lastly, due to the increase in the client base, I have interviewed a few third year university students who could be hired to perform most of the small audits. I’ve put their resumes on your desk to review sometime this week. So, what do you think?

Required: Prepare a response to your partner, Joshua. Address any issues with regards to the professional rules of conduct. Note:Professional rules of conduct are:

─Professional behaviour

─Integrity and Due Care

─Professional competence

─Confidentiality

─Objectivity

Homework Answers

Answer #1

Dear Joshua,

Thank you for filling me up on what has been happening during my absence. Firstly, I would like to tell you that it is our professional duty to co-operate with the court and give out information seeked from us as Ajax has defaulted on the loan.

Secondly, Jeremy's wife being the CFO warrrants non-undertaking of the assignment of TTL Limited as it shall affect our independence. Objectivity should be in "fact" and "appearnace" both.

Thirdly, we should uphold the highest level of integrity and soliciting ourselves " as the best in the region" is not in line with that.

Lastly, we should exercise the highest level of professional competence in all our assignments. Hiring students who have not passed out will not be appropriate.

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