• March 20th, 2016

Professional Ethics in Auditing

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Assignment 2  

You are the senior auditor undertaking the audit of a steel supply merchant. As part of your duties you are verifying the acquisition of property, plant and equipment. The major acquisition was a newly constructed steel warehouse. As you scan the invoices for materials that were included in the building of the warehouse you notice that there are a number of invoices for bathroom and plumbing fittings. The amounts on these invoices are not material. You have walked through the warehouse and have not found any bathroom facilities in the warehouse. All bathroom facilities are in the office block, a short walk from the warehouse. You have used the bathroom facilities in the office block and while these are in good condition they do not appear to be new. You have identified that the company accountant has approved these invoices for payment.
The budget is tight on this audit. On your last audit you were over budget and so you feel that there is pressure on you to complete this audit within budget. The invoices that you selected to check are only a sample of the invoices making up the cost of the new warehouse.
Using the Code of Ethics for Professional Accountants and the American Accounting Association Model, identify and discuss the ethical issues involved. Describe the action that you should take.

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