Problem
The ACCA Code of Ethics and Conduct (the Code) is binding on all members and students of ACCA. The ACCA Code is based on the International Ethics Standards Board for Accountants (IESBA) Code, and the fundamental principles set out by ACCA are similar as those of IESBA.
1. Briefly explain the Fundamental Principles to be followed by Professional Accountants regarding independence and Objectivity.
2. Discuss the following situations in the context of the independence of the auditor, showing clearly the principles involved: i) The audit manager in charge of the audit assignment of Kasal Ltd. holds 3,000 £1 ordinary shares in the company (total shares in issue - 300,000). The audit partner holds no shares. The recurring audit fee receivable from Papaye Ltd. a private company is £360,000. The total fee income of the audit firm is £2,520,00,000.
According to the concept of going concern, an entity is assumed to continue in business for the foreseeable future. The auditor has a responsibility to consider the future plans of directors and any signs of going concern problems as this may affect their opinion on the financial statements.
3. Identify and explain potential indicators that an entity is not a going concern.