Accounting Q&A · Auditing · Topic 3
Practise access to records, independence, confidentiality and liability. Try each answer before revealing it.
Worked example
An auditor discovers a direct financial interest in an audit client. Confirm ownership and notify the firm’s independence team. Remove the prohibited interest or decline the role as required.
Core concepts
1. What should you know about access rights?
The authority to obtain records or explanations depends on applicable law and engagement terms.
2. What should you know about duty of care?
The obligation to exercise the skill and care expected under applicable professional and legal requirements.
3. What should you know about independence of mind?
Professional judgement free from influences that compromise the assurance conclusion.
4. What should you know about independence in appearance?
Avoid circumstances that would cause an informed third party to question independence.
5. What should you know about integrity?
Be honest and straightforward in professional dealings.
6. What should you know about objectivity?
Exercise judgement without bias, conflicts or undue influence.
7. What should you know about confidentiality?
Protect information and disclose it only when authorised or otherwise permitted or required.
8. What should you know about self-interest threat?
An interest such as a financial holding could improperly influence judgement.
9. What should you know about self-review threat?
The auditor may be assessing work that they or their firm previously performed.
10. What should you know about civil liability?
Potential responsibility under applicable law for harm, depending on duty, breach, causation and other legal requirements.
Case 1
An auditor discovers a direct financial interest in an audit client.
11. Which audit concept is central here?
Self-interest and independence.
12. What is the main objective?
Evaluate the interest against applicable independence requirements immediately.
13. What evidence or procedure would you use?
Confirm ownership and notify the firm’s independence team.
14. What limitation should you consider?
Disclosure alone may be insufficient where the interest is prohibited.
15. What should happen next?
Remove the prohibited interest or decline the role as required.
Case 2
Management refuses access to a material inventory location.
16. Which audit concept is central here?
Access and scope limitation.
17. What is the main objective?
Assess whether sufficient appropriate evidence can be obtained.
18. What evidence or procedure would you use?
Seek alternative evidence and communicate the restriction to governance.
19. What limitation should you consider?
Management explanations alone may not resolve the limitation.
20. What should happen next?
Consider the effect on acceptance, continuance or opinion.
Case 3
A client asks for working papers to be emailed to an unrelated lender.
21. Which audit concept is central here?
Confidentiality.
22. What is the main objective?
Verify authority and any applicable legal or professional obligation.
23. What evidence or procedure would you use?
Confirm the request independently and identify authorised disclosures.
24. What limitation should you consider?
The client’s request does not settle ownership or disclosure restrictions.
25. What should happen next?
Document approval and share only through a secure approved channel.
Professional standards reference. For statutory duties, confirm the rules in the relevant jurisdiction.