The Ethics Of The Professional Code Of Ethics

1222 Words Aug 24th, 2016 5 Pages
Dear Ms Natalie

My name is Yunyao Zhu, the audit manager of the audit firm Reliableaudits & Co. whom has been allocated to the audit of the companies below which I will further discuss each company situation review. I will describe the possible threats to companies’ independence with respect to appropriate section of the Professional Code of Ethics. Lastly, under each company review, I will also propose necessary recommendations in order for Reliableaudits & Co. to safeguard against potential independence threats that have been identified.

1. Jatbulla Ltd.
This case has two threat, self-interest threat and self-review threat. Self-interest refers to the possible threat when an accountant or its staff has a financial benefit to the audit client (Campbell et al., 2013).In section 200.4 of APES 110, The firm is worried about high risk of losing a major customer (Campbell et al., 2013).In this case, Jatbulla Ltd is our new client, so managers might be directly or indirectly influenced to keep this client as being a public interest entity in section 290.26, due to their large number and wide range of stake holders, it is necessary to consider these few factors like size and number of employees, the type of the business inclusive of financial establishments like banks. I would recommend rules and regulations within an accounting firm detecting any staff with commercial interest in an assurance client and regulations in barring commerce dealings with regulars. Self-review threat…
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