Principles of Auditing and Assurance Services

Question: Discuss about the Principles of Auditing and Assurance Services. Answer: Introduction This study deals with auditing and ethical practices in an accounting firm. In this particular assignment, emphasis has been given on assisting students for developing critical analysis skills (Porter et al., 2014). It aligns with auditor dependence as well as issues for accepting the audit engagements. At a minimum, it means Fellowes as well as Associates for applying safeguards in section 290.177 aligning with respect to intangible assets valuation (Louwers et al., 2013). In other words, the valuation needs to be reviewed by an additional professional accountant who works as external audit team for obtaining the client acknowledgement of responsibility of financial valuation. Fellowes and Associates Chartered Accountants is one of the victorious mid-tier secretarial firm concerned with large variety of customers in and transversely the Australia. In the year 2014, Fellowes as well as Associates gains new client for HCHG (Health Care Holdings Group) for owning 100% for the business entities (Messier, 2016). Independence issues in accepting engagements After analyzing situation 1, it is noticed that one of the accountants intends for becoming a part of 2014 audit team for owning shares in HCHG. In this condition, interest of accountants is not material to him. Section AUST290.41.3 of APES 110 explains that the monetary interest in a client mostly creates self-interest threat. It is important to consider the fact that owing shares in an engagement client mainly help in creating direct financial interest (Hayes et al., 2014). As per Section 290.204, it means the auditor needs to consider the nature of financial interest for determining the threat significance as well as appropriate safeguards. In other words, matter to consider whereby shareholding is direct or indirect for acting as a role of the assurance team (Eilifsen et al. 2013) It implies that financial interest owns shares in the client company after creation of self-interest threat (Louwers et al., 2013). This particular section goes on to state for an auditor by considering nature of financial interest for determining the implication of the risk as well as suitable safeguard. Addition to that, potential issues like how material holds as well as understanding the senior managerial role in an effective way. As per 290.106, it means if a associate of the declaration Team or in case instant family member has express adherence to fiscal attention as well as material indirect financial interest (DeFond Zhang, 2014). In other words, Assurance client considers as one of the self-interest threat after creating significant evidence from elimination of threat or reduce it to given acceptance level This involves disposing the undeviating economic interest previous to individual for becoming a associate of reassurance Team (Arens et al., 2012). In other words, it relies upon disposing of indirect financial interest in remaining interest and acting as member of Assurance Team. Therefore, it requires removing of member of Assurance Team especially from assurance engagement. Self-interest threat majorly takes place when firm or an associate of the Assurance team is benefited from monetary interest as well as other self-interest disagreement from an Assurance client (Anderson et al., 2014). There are various examples of situations whereby it create threat involving limiting activities especially in case of direct monetary attention or material indirect monetary attention especially from an declaration client. In other words, financial interest in a pledge client helps in creating self-interest intimidation (Porter et al., 2014). It helps in evaluate the meaning of threat as well as suitable safeguards for eliminating the threat or reducing at given acceptance level. Therefore, it requires evaluating the role of person who is responsible to hold financial interest as well as materiality of financial interest and financial interest types (Louwers et al., 2013). The key questions arise whereby an item is material as well as degree of subjectivity especially in the valuation services (Hayes et al., 2014). As far as intangibles are considered, it is stated subjective attributes as per valuation of real property such as land as well as buildings. This means Fellowes as well as Associates for withdrawing from the audit or client for obtaining another independent valuation of intangibles (Eilifsen et al. 2013). The question arises whereby it state valuation services prior to audit engagement for accepting the activities. There is no conflict between Followers as well as Associates duties acting as valuer and auditor (Louwers et al., 2013). Therefore, for the role of (Auditors, Fellowes and Associates), it is essential for providing an opinion especially on the valuation revealed in the near future. As per APES 110 ss. 290.174 to 290.179, it addresses the potential issues surrounding the stipulation of services valuation to an declaration client (Hayes et al., 2014). The main problem arises from financial report audit for gathering evidence regarding client valuation of the assets. If an auditor provides client valuation, then the auditor requires auditing his or her own work (Eilifsen et al. 2013). Other safeguards majorly apply within valuable situations as per section 290.177 connecting: It includes an added expert accountant who was not a associate of assurance group for reviewing the job done (Louwers et al., 2013). It means confirming the audit consumer for thoughtful the fundamental assumption for assessment as well as methodology for obtaining the approval for use (Porter et al., 2014) It involves obtaining the audit client acknowledgement of responsibility resulting from work performed by audit firm (Hayes et al., 2014) It involves in making arrangements whereby personnel provides services who does not participate in the audit engagement matters (Hayes et al., 2014) Conclusion At the end of the study, it is concluded that in the future, audit team should not perform financial valuation especially for audit clients who are likely to subject of financial report audit. These are majorly immaterial in nature as well as poses low degree of subjectivity. The client may obtain another independent financial valuation as well as Fellowes and Associates after withdrawing the audit. Reference List Anderson, U. L., Gaynor, L. M., Hackenbrack, K. E., Lisic, L. L., Wu, Y. J. (2014). Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Release No. 2013-009, Proposed Rule on Improving the Transparency of Audit: Proposed Amendments to PCAOB Auditing Standards to Provide Disclosure in the Auditor's Report of Certain Participants in the Audit: Participating Committee Members. Current Issues in Auditing, 8(2), C1-C7. Arens, A. A., Elder, R. J., Beasley, M. S. (2012). Auditing and assurance services: an integrated approach. Prentice Hall. DeFond, M., Zhang, J. (2014). A review of archival auditing research. Journal of Accounting and Economics, 58(2), 275-326. Eilifsen, A., Messier, W. F., Glover, S. M., Prawitt, D. F. (2013). Auditing and assurance services. McGraw-Hill. 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