Mitchell is part of an audit team who has been sent to Mexico to conduct an audi
ID: 2470066 • Letter: M
Question
Mitchell is part of an audit team who has been sent to Mexico to conduct an audit of one of their client’s subsidiary companies. During the audit Mitchell uncovers a series of bribes that the company has paid to local authorities. Bribes are considered a normal part of business in this particular city so the subsidiary company feels as though they have done nothing wrong. Mitchell thinks of herself as an honest person and is trying to decide what is ethically appropriate.
Required: Determine what decision Mitchell will make regarding whether or not she will report the bribes by applying ethical theories of teleology and deontology. (5 marks)
C. China and Chong, accountants, were employed for several years by Bulls Co. Ltd to make annual audits. As a result of a change in control, in company discontinued the engagement of Chin and Chong and retained another firm of accountants. Bulls Co. thereupon demanded that Chin and Chong surrender all working papers they had prepared in undertaking audits for the company.
Required: Chin and Chong refused on the grounds that the working papers were their property. The company brought legal action to recover the working papers. Should it succeed? State briefly what the law is, in general, as to ownership of auditors’ working papers. (5 marks)
Explanation / Answer
1. From the perspective of Deontology or moral duty as an Auditor , Mitchell should report the cases of Bribing in her report and also inform the seniors of her Audit Firm. As a responsible Auditor and Law abididng Citizen , it is her moral duty to report the incidents or bribery.
From the Teleological point of consequentialism , Mitchell should consider the ill effects of continuing bribery can have on the overall Corporate Governance of the Gropu as a whole. So thinking about the consequence also , she should report the bribery in her report for stemming the rot at the beginning instead of encouraging it.
C . Chin & Chong are right in refusing the Audit working papers to Bulls Co. Ltd . As per CPA law, Audit working papers prepared bu Auditors during the conduct of client's audit are solely the property of the Auditor . The access to the Working paper can be given on mutual consent but not by lawsuit. The Auditor is not obliged to provide the working papers to anybody else except when asked by a Federal Agency or Govt in realtion to any Tax or any other dispute.