Question

B. Mira A Certified Public Auditor licensed in Palestine is the partner in charge of Ooredoo audit. In order to save cost, she hired a group of students from Al-Najah University to help her conduct the audit. A month later Mira received the audited financial statements and the report from the students. She signed it and send it to the board of directors of Ooredoo. What standards were violated and why? Is there a violation of the elements of audit quality control, briefly discuss?

Audit"
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Answer 1

B. Yes, there were several standards which were violated in the process of audit being followed.

As it is being mentioned in the question that Mira hired some group of University students who did the financial statements auditing and reporting and Mira just signed the report and sent it, it is not ethically correct to do so.

According to the standards, the auditing must be done by some professional person who is acting independently. A professional is considered to have all the proficiencies needed to do the audit process and organizations rely on them.

So, when the audit us being done by students , who are not professionals is a violation of the standard. Also Mira did not even review the reports made by the students and sent it to the board of directors which is also violation of conduct as one person must review the work for which he is to be responsible before making it to submit to others. So work must have to be reviewed.

This is mainly because the students are not so well trained and it is chance that they can committ mistake and then Mira would be held responsible for this as she was supposed to complete the audit.

So, it is clear that what standards were violated and why by the act performed by Mira.

Yes, there is also violation of the elements of audit quality control.

The elements contain :

• Independence, Integrity and Objectivity
• Personnel Management
• Acceptance and continuance of clients and engagements
• Engagement performance
• Monitoring

Let's see how these elements were violated.

Independence, Integrity and Objectivity is violated as the auditing is done by students hired by Mira and do not belong to any firm, can manipulate statements and prepare reports which are not fair as they have no idea about procedures and policies being not a professional. They may fappen to work on conditiond given by Mira which rises questioning for their independent working.

Personnel Management is highly violated as the firm is dependent on the proficiencies of its auditirs or personnel. But here the one auditing is not at all proficient with auditing which could hamper the firm's reputation. Also the supervision is negligible as Mira did not even review the work done by the students. Thus is not good as the supervision was inversly proportional to the proficiencies of personnel. The more one is proficient, the less us tge requirements for supervison.

Here, the students were not at all proficient and talented and neeed high supervision but Mira neglected this. Also this personnel management element is considered to be related with appointing personnel for positions but these appointed personnel should be well talented and in all means proficient in the profession of auditing. But as we know, Mira hired the students, it is against the conducts. So, thus personnel management is also being violated.

Same goes for the acceptance and continuance of clients and engagements. Here the firm or individual should properly select and decide to which individual should it retain and permit to continue for the auditing purpose. This element is violted as Mira being a part of firm has not followed the conducts and rules properly by hiring unprofessional students with no expertise for doing firms auditing.

The other element that is engagement performance relates to assuring the performance of personnel that it meets the standards and regulations being set. Here in this case, the personnel appointed that are the group of students, no one kept a check on their work and reviewed their performance nor Mira bothered to do this once to check if they meet the requirements and are done on set standards or not. Hence its the direct violation of this element.

The last element that is monitoring is responsible to monitor the adequacy of the organization's rules and procedures and the performance of the profession and the activities done by them and the development of the professional. And in the case discussed above, it is clear that Mira did not even train those students and directly made them work on the auditing. Lastly she did not even monitor or reviewed their work.

Thys, its clear hoe the elements are being violated. These violations lead to the preparation of false Financial reports which mislead the stakeholders of the concerned company as wrong reports are presented to them. Thus, its very important to prepare a correct and adequate report.