Auditing and assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

a) What are the basic needs to be met to achieve objectives of accounting profession as per code of ethics?
b) Write briefly on the composition and function of Disciplinary Committee under ICAN Act, 2053.
c) What due care should a professional accountant in public practice adopt while handling client‟s monies?
a) Answer
The code of ethics recognizes that the objectives of the accountancy profession are to work to the highest standards of professionalism, to attain the highest levels of performance and generally to meet the public interest requirement set out above. These objectives require four basis needs to be met:

 Credibility: In the whole of society, there is need for credibility in information and information systems

 Professionalism: There is need for individuals who can be clearly identified clients, employers and other interested parties as professional persons in the accountancy field.

 Quality of Services: There is a need for assurance that all services obtained from a professional accountant are carried out to the highest standards of performance

 Confidence: Users of the services of professional accountants should be able to feel confident that there exists a framework of professional ethics which govern the provision of those services.

b) Answer
As per Section 14 of ICAN Act, a disciplinary committee comprising of following members shall be constituted:

a. FCA member designated council from amongst elected CA council member-
b. three persons nominated the council from amongst the council members- Member
c. Two persons nominated the council amongst the members-Member
d. One person nominated the Auditor General-Member

The main function of the disciplinary committee is to recommend the council to take necessary actions after investigations upon complaints lodged against any action contrary to the ICAN Act or regulations, by-laws or code of conduct framed under the ICAN Act rendered any member , or the institute receives any information of such kind.

The chairman or members are not allowed to attend any meeting that hears complaint against the Chairman or member of disciplinary committee. The Disciplinary committee has the authority, similar to a Judicial Court, in respect of summoning concerned person and investigating evidences and witnesses.

The disciplinary committee recommends to the council, along with its opinion and finding, for necessary action against a member.

c) Answer
As per ICAN‟s Code of Ethics, a professional accountant in public practice should:

a. not hold client‟s money if there is reason to believe that they were obtained form, or are to be used for, illegal activities.
b. keep such client‟s monies separately from personal or firms‟ monies

c. use only for the intended purpose and always be ready to account for those monies to any persons entitled
d. maintain separate bank account for such monies and any monies received should be deposited without delay to credit of a client account.
e. monies should only be drawn from the client account on instruction form the client
f. fees may be drawn from client‟s monies only after intimating the amount of fees and client has agreed to such withdrawal.
g. provide a statement of account to client at least once a year
h. if the monies remain for a significant time, place such monies in interest bearing account with concurrence from such client. All the interest earned should be credited to the client account.

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