AYB 301 Audit & Assurance

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Group Ethics Project
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Semester 1, 2015
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Total Word Count: 1250
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This case study will analyse the ethical dilemmas faced by David, audit manager at C & A who is hired to do the financial year-end audit for MAL. The six step ethical framework will be adopted to gain an understanding of principles and obligations for analysing the situation faced by David and arrive to a professional and responsible resolution.

Step 1: Relevant Facts of the Case
(APESB, 2013) | * Dispute between the CFO and David, in relation to the overstated inventory and pressure and intimidation threat from CFO. * This creates threat to objectivity and could unduly influence on David’s professional judgment. * Creates threat to confidentiality, if David discloses confidential information to Peter | Section 260: Gifts and Hospitality S260.1- Gifts offered to members from clients may create self-interest and familiarity threats to integrity, objectivity and independence of the auditor. (APESB, 2013) | * Accepting the discounted yearly membership may pose threats to the integrity, objectivity and independence of David, * He could be influenced to return a favour to the firm * Give an impression that David attended assignment is bias and will not benefit the public. | Part C: Members in Business | | S300.6 Cannot knowingly engage in any business that impairs or might impair the good reputation of the profession. S310.3 Threats arising from pressures shall be evaluated and safeguards applied to eliminate them to an Acceptable Level. (APESB, 2013) | * David fails to take on the necessary safeguards to eliminate such pressures and threats to an Acceptable Level, - no formal dispute resolution process used with the management within the organization. * Necessary safeguards not