Mr. KC, Partner of CA firm involved in Audit of X Limited was offered with luxury car X Limited for his personal use till financial statements is approved in AGM. Give your comments

Auditing and Assurance Revision Questions and Answers

Answer
A professional accountant in public practice or an immediate or close family member may be offered gifts and hospitality from a client that may create threats to compliance with the fundamental principles of code of ethics.
When a professional accountant in public practice or an immediate or close family member is offered gift and hospitality, the situation shall be evaluated. In the instant case, an offer of using luxury car for personal use may influence the opinion of professional accountant in public practice. Self-interest threats to objectivity or confidentiality are created when gifts and hospitality is made to unduly influence actions or decisions, encourage illegal or dishonest behavior, or obtain confidential information. Intimidation threats to objectivity or confidentiality are created if such gifts & hospitality is accepted the professional accountant in public practice or an immediate or close family member.

A professional accountant in public practice shall evaluate the significance of such threats and apply safeguards when necessary to eliminate the threats or reduce them to an acceptable level. Accordingly,

when the threats cannot be eliminated or reduced to an acceptable level through the application of safeguards, such offer shall not be accepted.



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