Mod2

Question 1

6 rules of professional conduct

Answer 1

1 confidentiality
2 professional behavior 
3 integrity & due care 
4 competence
5 adherence to professional standards
6 non associaton w/ false and misleading information

Question 2

5 threats to independence

Answer 2

1 self interest
2 self review threat 
3 advocacy threat
4 familiarity threat
5 intimidation threat

Question 3

how to mitigate independence threats

Answer 3

1 not accept the audit
2 rotate senior members on the audit engagement
3 circulate client list every year to see who own shares in the clients
4 do not compile f/s or records for the client that you are auditing

Question 4

4 elements of negligence

Answer 4

1 auditor owned a legal duty of care to the plaintiff
2 auditors conducted a breach of their duty
3 there must be proof of the damages that resulted from negligence
4 proof between the breach & resulting damages

Question 5

fraud triangle

Answer 5

1) incentive/pressure - “you need to pay for your kids university”
2) rationalization - “they dont pay me enough”
3) opportunity - “the safe to the blank cheques never locked”