Auditing is a crucial process that assures the interest of inventors, creditors, and other stakeholders of the company. One should always keep in mind the fundamental principles given under the code i.e. integrity, objectivity, professional competence and due care, confidentiality, and professional behavior, while reviewing WEINSTEIN, CPA, and WEINSTEIN & CO., CPA I would like to mention my understanding regarding breach of APES 110 Code.
WCPA and Weinstein neglected to practice Professional Competence and Due Care as failed to recognize any association between Shell operator A and Shell issuers. Shell operator (A) has appointed Weinstein to conduct the audit and interim reviews for four Shell issuers, without being formally appointed by the Director and Officers of each Shell issuer. The member never questions the authoritative role played by the Shell operator A to instruct on the behalf of other Shell issuers. The firm also conducted deficient audits and interim reviews for 4 Shell Issuers.
WCPA and Weinstein have also failed to imply procedures to determine and ascertain material related party transactions of Shell issuers. There was a breach in the maintenance of the independence of auditors from their clients, as Winston and WCPA appointed as a trustee for their three audit clients which breaches the AS 1005 and rule 2-01 (b) of regulation SEC .The Firm breaches professional ethical conduct as they are required to act in accordance with the relevant rules, laws, and regulations which they failed to do so.
WCPA and Weinstein were appointed and acting as trustee for 3 Shell issuers shall be characterized under Self-Interest threat, being serving as trustee will inappropriately influence auditor’s judgment and behavior towards an interested company.
Another potential threat to compliance shall be Self-review threat as the member may fail to act appropriately in evaluating of the previous outcome of decisions made by the member, or any other individual within the firm of the member, or any organization where the member is acting as an employee. The member fails to depict the original picture about the financial position of the company. It also breaches the integrity principal Fundamental principles of professional ethics as stated in APES110.
In the given case member knowingly made reports, returns which contain materially false and misleading statements, the reports are also based upon information which is been provided recklessly and omitted various required information. Especially in the reference of SEC v Perlstein et al, The firm has violated interrelated Party transaction regulations and fails to disclose various facts regarding the appointment of members in Shell issuers. According to R400.20 As characterized, an Audit Client that is a Listed Entity incorporates the entirety of its Related Entities. For every other element, references to an Audit Client in this Part incorporate Related. At the point when the Audit Team knows or has the motivation to accept, that a relationship or situation including any another Related Entity of the customer is applicable to the assessment of the Firm's Autonomy from the customer, the Audit Team will incorporate that Related Entity when recognizing, assessing, and tending to dangers to Independence. Members have integral duty to maintain professional ethics, in this case, I have able to identify two ethical principles i.e. Professional Competence and Due Care, and Professional behavior which are being breached. Two threats i.e. Self-review threat and Self-Interest threat has been exposed during my investigation.
APES 110 Code of Ethics for Professional Accountants.
2010. APES 110 Code Of Ethics For Professional Accountants. [online] Available at: <http://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf> [Accessed on 04 August 2020].
Audit Evidence (As Amended for FYE 12/15/2020 and After)
Rule 2-01(b) of Regulation S-X.
R 400.20 of APES 110 Code of Ethics for Professional Accountants.
Securities and Exchange Commission v. Sharone Perlstein, Aric Yerusalem : Swartz A/K/A Eric Yerusalem Swartz, : and Hadas Miriam Yaron
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