Question

D. Miss Nsiah is a qualified chartered accountant who prepares financial statements for a firm located at Tesano. Miss Nsiah does not qualify for a practicing certificate and so she does not provide audit service to the client. This is her first year of preparing financial statements for the firm. When compiling the most recent accounts, she detected some material errors in the previous financial statements. It seemed that the accounts were based on incomplete records as certain costs were excluded, either deliberately or because records were not maintained. 5 The Chief Executive Officer of the firm has also requested some additional work to be completed on a complex tax issue. However, she has no prior experience and does not feel competent to the work. The CEO would also like her to provide an audit opinion as they are planning to apply for funding from a bank and the bank would like some further assurance.

Required: With reference to Code of Ethics for accountants, discuss the ethical principles applicable to the above scenario.

Answer 1

If we consider the ethical principles, then she should report the matter to the higher authorities that there are certain problems in the financial statements of previous years.

The senior accountants would be loking onto the matter and find out whether it's true or not.

It may be possible that as she is not a well practisioner she may be misunderstanding things but it's better to clear all dounts which is beneficial for the company also.

Not reporting the matter to higher authorities is not at all an ethical behavior.

As mentioned, company is wishing to dive her works of audir on which is is not very proficient, she should directly talk with the management regarding this and what management could do is to assign her under a senior accountant who is already proficient in doing all who would train her and assist her in doing all works.

This way she would also learn and have good practice. And as senior is looking into her, he or she would correct her mistakes.

Thus, this is the most ethical way to dels with situations mentioned above.