factors to take into account when accept a assignment 2637

  • basically i’m a student and I’m not sure about this audit so I need some help from u guys here.
    the case study is saying that I’m a busy Chartered Accountant working in practise on my own and was once employed as internal auditor for a similar but larger shoe company.
    now the CEO’s wife which is my sister ask me to assess the risks facing the business and to make suggestions as to how these risks should be manage.
    this company actually have lots of problems where there is no segregration of duties between the one who takes orders and prepare accounting records. Besides that, this company has a low internal control, got financial risks, external risks, operational risks and compliance risks.
    this company is a small company where the CEO and his wife are the only share holders and partly by shortly and long-term bank loans. The CEO’s does not have any investment in the business and the two daughters did not involve in the business. In addition, there are some disagreements among the family members about how the business should run.
    The question now is what are the factor that I have to take into account whether or not to accept this assignment from my sister.

  • waitheng: The familial relationship between you and the CEO should preclude your taking the engagement, in my opinion. There is a direct relationship between you (the auditor) and one of the two majority shareholders (the CEO’s wife, who is also your sister). Avoid the obvious appearance of impropriety and refuse the engagement.

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