Audit Assurance and Compliance of luxury travel holiday Free Samples

A self-interest threat and advocacy threat may arise when the auditor is been asked to promote the organization and auditor put it’s personal, financial and self-interest in decision making. All this unethical behavior will influence the professional judgment and overall affect the auditor independence. As per the given situation, LTH providing self-interest and advocacy threat to CJI of reappointment only after promoting LTH business in next travel agency seminar (ACCA, RELEVANT TO ACCA QUALIFICATION PAPER P7 , 2012). To show sincerity towards audit firm and create long relationship in anticipation of smooth audit, Gifts and hospitality were offered by the client to a member of the audit team which gave rise to self-interest threat. There is a issue in particular circumstance because the offer of gifts influences the auditor judgment in favor of the client that might create an unethical and a bias audit observation and affect the overall auditor independence. As per the given situation of LTD, threat exists for CJI firm as its members judgment is influenced by accepting a free offer of free 14 days holiday package voucher to the Greek isles for both Geoff’s and his family (ACCA, RELEVANT TO ACCA QUALIFICATION PAPER P7 , 2012). This circumstance occurs when in case there is a situation where the person related with the audit assignment or the partner of the audit firm has a personal relationship with any key personal of the company in which the auditor is working out audit assignments. This will create certain threats related to self interest factors of the auditor. As in the particular case audit team member might be more sympathetic towards the client and make a decision in accordance with the benefit close family member personal interest. As per the given situation there might be a biased auditor judgment because Michael is having close family relationship with LTH financial controller. When any non-audit service such as tax calculation and accounting entries performed by any auditor or by any person from the audit team influence the audit professional judgment and overall affect the audit independence as per the given situation Annette being the member of audit team helping the client in tax calculation and accounting entries affects the auditor judgment. Reviewing the self inputted transaction will affect the auditor’s independence as he will not try to observe errors and frauds in the work done by him or any other member of the audit team (Kaplan, 2012). Safeguard are the various measure available to CJI being get protected. They shall be the applied against the threat faced by professional to eliminate them in an acceptable manner. CJI has identified various safeguard of each threat in given situation Note - If the above safeguard cannot be reduced the auditor should withdraw from the engagement Business risks are certain hazards on happening of which might enhance the vulnerability of the enterprise. The business risk in MSL are the factors that could prevent and hinder the organizational goal and objective the ultimate business risk among the various risk faced by the organization is the risk that seizes to be a going concern. Therefore company faces various risks factors that might contribute towards business failure examples of business risk include- In the particular case study the current organsiation has its business of manufacturing and selling the equipment and spare parts which are handful in doing the mining jobs. MSL has operational centers in Perth, Newcastle, and Mt. Isa.   Warehouses the equipment and spare parts and provide for sales and maintenance services. An auditor with Crampton and Hasaad has found various audit risk while auditing the financial statement of MSL (ACCA, ANSWERING AUDIT RISK QUESTIONS, 2015). There is a great probability that the auditor associated with the business enterprise might lack in the decision making and states an inappropriate opinion towards the enterprise financial statements. Auditor will access inherent risk, control risk and accordingly find the level of audit risk materiality enables the auditor to apply procedure which can support his opinion that is higher the materiality level, higher will be materiality level, higher the need of audit evidence and lower will be the audit risk thus there is inverse relationship between audit materiality and audit risk. Also, there exists inverse relationship among risk of material misstatement and detection risk as higher the level of risk of misstatement lower will be the detection risk and vice versa. When there is lack of internal control environment in the current business establishment it will give rise to the associated inherent risk. When auditor is required to enhance its judgment skills to give an appropriate decision there can be a instance that auditor might misses out to ascertain material facts, this will give rise to the inherent risk (simplified, 2013). Control risk arises when related internal control in MSL exists but ineffective or in other words, we can say that when absence or failure in the operation of the relevant control of the entity results in amaterial misstatement in the financial statement. Assessment of control risk is higher if financial statement is prepared by individual who don’t have necessary technical knowledge of accounting and finance (simplified, 2013). Situation of detection risk arise when in situation there are certain material miss-statements and auditor fails to disclose in its opinion report due to lack of determination and skills in identifying it. The auditor may apply proper policies and procedure to detect a material misstatement in financial statement arising due to omission, fraud, and error. Detection risk can be reduced or controlled by auditor if it increase the number of sample transaction for detailed (simplified, 2013). ACCA. (2015).Answering Audit Risk Questions Retrieved April 20, 2017, from https://www.accaglobal.com/in/en/student/exam-support-resources/fundamentals-exams-study-resources/f8/technical-articles/audit-risk0.html ACCA. (2012). Relevant To Acca Qualification Paper P7 . Retrieved April 20, 2017, from https://www.accaglobal.com/content/dam/acca/global/PDF-students/2012s/sa_nov12_p7_ethics.pdf IRELAND, C. (2014). Provision Of Accounting Services To An Audit Client.Example Of Threats And Safeguards. Retrieved April 20, 2017, from Certified Public Accountants: https://www.cpaireland.ie/members/technical-resource/ethics/ethical-standards-for-auditors/accounting-services-examples-of-threats-and-safeguards Kaplan. (2012). The Code of Ethics for Professional Accountants. Retrieved April 20, 2017, from https://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Code%20of%20Ethics%20for%20Professional%20Accountants.aspx simplified, A. (2013). Audit Risk Model, Inherent Risk, Control Risk & Detection Risk. Retrieved April 20, 2017, from https://accounting-simplified.com/audit/risk-assessment/audit-risk.html Getting academic assistance from