Auditing and assurance revision question and answer

Auditing and Assurance Revision Questions and Answers

(a) Mr. A, a practicing-chartered accountant receives commission from Mr. X, another practicing chartered accountant Rs. 50,000 being 50% of the audit fee for the referral of statutory audit of Xerox Company Limited, a listed company. State your views.
b) Mr. Nimesh, a partner of TMS & Associates, a practicing Chartered Accountant in its business letter head prints its previous association as member Secretary to one of the reputed political party of the country. State your views.

Answer:
a) According to Section 240.5 of Code of Ethics, 2018 issued Institute of Chartered Accountants of Nepal, the payment or receipt of commission a professional accountant in public practice could impair objectivity and independence. A professional accountant in public practice, should not therefore pay a commission to obtain a client nor should a commission be accepted for referral of a client to a third party. The payment and receipt of commission are permitted only for the such engagements for which independence is not required and the professional account in practice should nonetheless disclose the facts to the client. In the above case since the above assignment requires independence, Mr. A and Mr. X both are not complying with the ethical requirements under Code of Ethics issued ICAN. The disciplinary action can be taken the Council on fulfilling the petition requirements and after recommendation of Disciplinary Committee.

b) According to preface directives issued ICAN related to then existing Code of Ethics of ICAN, 2060, a professional accountant in practice, should not print or write its positions not related to the accounting profession in the name plate, identity card, visiting card, business card and business stationeries used for the purpose of its profession. Hence, Mr. Nimesh has violated ethical requirements under Code of Ethics issued ICAN and hence attracts the disciplinary actions Council under the recommendation of Disciplinary Committee.



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