CASES-G2.docx - GROUP 2 Apply the conceptual framework to...

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GROUP 2: Apply the conceptual framework to the following cases. Identify the threats and the key fundamental principles and what are the steps that you need to do in each of the following situations: Case 1: You are a partner in a firm of accountants. Five years ago, the firm was appointed as external accountants to a young, successful and fast-growing company, engaged to prepare year end accounts and tax returns. The business had started trading with a handful of employees but now has a workforce of 200, while still remaining below the size of company requiring a statutory audit. Due to your close relationship with the directors of the company (who are its owners) and several of its staff, you become aware that staff purchases of goods manufactured by the company are authorised by production managers, and then processed outside the accounting system. The proceeds from these sales are used to fund the firm’s Christmas party. Case 2: You are a sole practitioner who used to provide a range of accountancy services for a small company (Company Joots) that owns a hardware shop in the town where you practice. Following a brief retendering process, the client chose to engage an alternative firm of accountants. Both you and the other firm had been asked to tender for a range of services, including the preparation of year end accounts, tax compliance work, and a due diligence exercise in respect of the intended purchase of a small hardware business in the neighboring town. You believe that you were unsuccessful in

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