Auditing

3102AFE - AUDITING

ASSIGNMENT, SEMESTER 2 2011

1. Determine the facts

* Sam is a qualified chartered accountant and has just been made a partner at R&S chartered accountants.

* SSSL wants to merge with XYZ software LTD however an unqualified audit opinion is needed to guarantee the merger with XYZ

* There are issues regarding the non-current assets fair value, some of the software patents and licenses that may now be impaired

* Accountants of SSSL are not up to speed as Sam, there are internal control issues

* Sam has re-valued the patents and licenses

* Sam has stated he needs more time but has been told by Gary and Daisy to go ahead and sign the audit

* Sam is under pressure to sign the audit from three parties; Gary, Daisy and his wife to be

What is he going to do?

2. Define the ethical issues

A) List the stakeholders affected

* Sam (his own reputation and personal position)

* Gary Rock - Audit partner of R&S, this is a big deal for his company as it will gain his firm a big auditing fee in future, as well as being the supervisor for Sam some of the fault could fall upon him if things do not go smoothly

* R&S chartered accountants - the auditor's reputation, present and future clients of R&S may be affected.

* SSSL's - Shareholders, duty of care owed by auditors to be truthful, show due care and act in an ethical manner

* The public at large - as the company (SSSL) is publicly listed, there may be a larger than expected effect if the wrong decision is made

* Daisy Wave - As the deputy CEO of SSSL she has a lot at stake in getting this audit complete so that the merger can go through as she will benefit from the merger greatly

* XYZ Software LTD - there is a duty owed to third parties, liability may arise, if there isn't sufficient disclosure XYZ could suffer greatly if the companies were to merge

* SSSL's Accountants

* Competitors - Since two large companies are looking to merge it could have an adverse affect on competing companies.

* Other managers