Reference no: EM132742988

SCENARIO

Ali and Sami audit firm has been the auditors of EXE Co for many years. Before the commencement of the audit, EXE Co informed Ali and Sami audit team that they are planning to apply for a huge bank loan to tide up their financial issue.

From the later months of 2019, business has been very dull in EXE Co and the movement of funds into the company has been extremely poor. Staff salaries in EXE Co were pending and suppliers had not been paid.

EXE Co believed that the sales would pick up by 2021 again and this one time, they would need the support of the auditor to help them with a good audit report. A good audit report will not only help them to get a bank loan but will also help to solve many other problems within the company.

Problem 1: "A unique feature of the auditing profession is the responsibility to follow professional ethics and act in the public interest."

Define professional ethics? Give your understanding of the concept of professional ethics and legal liability in auditing profession which is to be followed by Ali and Sami audit firm.

Problem 2: From Ali and Sami audit firm's point of view, give your understanding of the reasons for planning an audit and its risk assessment while accepting the audit of EXE Co.

Contrast the stages of audit planning process to be followed by Ali and Sami Audit firm.