During the audit period, the liaison officer deputed the client Lumbini Insurance Company constantly asks you to participate in lunch arranged outside office premises. He has also informed you that there is a program of welcome and farewell dinner too. Liaison officer has also informed you that you need not worry about time schedule, as there would be someone available among client’s staff to bailout if needed. Daily newspapers and magazines are made available in plenty in the audit room. Other staff of the client are also having regular visit in the working area.
Section 250 of Code of Ethics 2018 for the members of the Institute of Chartered Accountants of Nepal states about the gift and hospitality to the auditors the client.
The existence and significance of any threat will depend on the nature, value, and intent of the offer. Where gifts or hospitality are offered that a reasonable and informed third party, weighing all the specific facts and circumstances, would consider trivial and inconsequential, a professional accountant in public practice may conclude that the offer is made in the normal course of business without the specific intent to influence decision making or to obtain information. In such cases, the professional accountant in public practice may generally conclude that any threat to compliance with the fundamental principles is at an acceptable level.
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 basic needs to be met. They are credibility, professionalism, quality of services and confidence. An auditor is expected to maintain the highest degree of integrity, professionalism and independence. He represents the trust and faith of the whole professional body. There could be various obstacle and impediments while conducting his professional duty. However, he should remain intact and vigilant towards achieving his professional goal.
Provision of lunch is governed conditions laid in engagement letter and appointment letter. If the contract states provision of lunch, it should not be construed as accepting any undue advantage whether arranged inside or outside. However, attendance in farewell party is not concerned with the auditor. Thus, the auditor needs to avoid such attendance. Receiving Newspapers as courtesy from the client and the
regular visits the staff of the client in the working place is not the problem but it must be seen that there would be no compromise in the professional ethics and standards.