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25 Mar 2019

Amber Ltd is a public company. It is not listed on the ASX and it has no constitution. Su is a large shareholder of the company who is upset with the way in which Amber Ltd is being run. She does not consider the directors have made a sensible decision in deciding to borrow funds from Loans Ltd. As a condition of lending, an officer of Loans Ltd will be appointed as director of Amber Ltd. Su wants the company to have a constitution that requires directors to offer existing shareholders the opportunity to invest in more shares, before the board can seek funds by borrowing from an outsider. Su makes her proposal to Cliff, an executive director of Amber Ltd, who has a 10 year term under the company’s constitution. Cliff and the other directors refuse to consider Su’s proposal.
Required:
Answer the following questions. Refer to relevant sections of legislation in your response.
a) Do the directors of Amber Ltd have the power to borrow money from Loans Ltd?
b) Do you think Amber is listed on the ASX? Why, or why not?
c) Why would Loans Ltd want one of its officers to be appointed a director of Amber Ltd?
d) Does the Corporations Act allow Su to remove Cliff as a director even though he has a 10 year term under the company’s constitution?

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Tod Thiel
Tod ThielLv2
27 Mar 2019

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Write answers to each of the five (5) situations described belowaddressing the required criteria (i.e. 1 & 2) in eachindependent case. You may use a tabulated format if helpful having“Threats”, “Safeguards” and “Objective Assessment” as columnheadings.

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(c) While having a conversation with Brock Lesnar, an AuditSenior at ASLA, Bradley learns that Brock has been requested toperform Secretarial duties for Australian Minerals Limited (AML)for about six months. AML has been ASLA’s audit client for a numberof years. The long standing Company Secretary of AML, Mr StephenTaylor has retired. Stephen’s role ranged from performingadministrative duties to providing advice on corporate governance.The Directors of AML anticipate that it would take about six monthsto find a suitable replacement and in the meanwhile would likeBrock to help.

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(e) Jeffery Stallone, the current Senior Manager on the audit ofADBC Ltd (ADBC) which specialises in the production of miningequipment, has just entered into a business venture (Zoom Motors)with the CFO of ADBC, whereby they are both equal partners in abusiness retailing motor vehicles. Jeffery has informed you thatthis is not a problem since the 2 entities (ADBC and Zoom Motors)are in different noncompeting industries.

Required: For each of the independent situations above, andusing the conceptual framework in APES 110 (Code of Ethics forProfessional Accountants), answer the following questions:

1. Identify potential threat(s) to independence & recommendsafeguards (if any) to reduce the independence threat(s)identified. (5 marks)

2. Provide an objective assessment of whether audit independencecan be achieved (5 marks) (Total 10 Marks)

If possible, can i get the answer to this with proper APESreferencing(legislation)

Read the information on “Valuable Jewellery Ltd.”.

Valuable Jewellery Ltd.

You are the audit manager of a Hong Kong CPA firm, Lee and Young. Your firm has recently been engaged as the auditor of Valuable Jewellery Ltd. (Valuable Jewellery) and will be conducting the audit for the year ended 30 June 2016. Valuable Jewellery is a company incorporated in Hong Kong and is engaged in the manufacture and trading of a wide range of jewellery. Its products are mainly sold to local customers and mainland tourists in Hong Kong.

During the planning stage of the audit, you discovered the following:

1) Valuable Jewellery was established 30 years ago by Mr Tse, a man who is highly respected in the jewellery business and internationally known for his jewellery designs and gem valuation expertise. Mr Tse remains the Managing Director of the company and holds 80% of its issued share capital. Mr Tse’s two daughters, Delphine and Daphne, each hold 10% of the remaining shareholding and are also executive directors on the Board of Directors.

(2) Valuable Jewellery’s previous auditor was a sole practitioner who unfortunately died from a heart attack last year. Your CPA firm was introduced to Mr Tse through his son-in-law, who is currently the administrative manager of your CPA firm, Prior to l 15 engagement, your CPA firm had never been involved with companies in the Jewellery industry.

(3) Valuable Jewellery’s had unmodified(clean) audit reports issued by its previous auditors from the start of the business.

(4) With the economic recovery, there has been a sharp increase in the company’s sales for the year under review. To cope with such an increase in demand, two new shops, one located in Tsim Sha Tsui and another in Macau, were opened during the year in addition to the main shop in Central.

(5) All high value gems were kept by Mr Tse in his private safe in the main shop. When certain gems were needed for a particular design, Mr Tse would take his gem collections out and pick the appropriate pieces. He would then decide the cost allocation of the designed jewellery.

Answer the following questions.

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(i) Briefly define the two components that is part of risk of material misstatement (RMM).

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