Answer : The preparation of accounting records is a service which is frequently requested of a professional accountant in public practice, particularly by smaller clients, whose business are not sufficiently large to employ an adequate internal accounting staff. It is unlikely that larger clients need this service other than in exceptional circumstances. In all cases in which independence is required and in which a professional accountant in public practice is concerned in the preparation of accounting records for a client, the following requirements should be observed.
a. The professional accounting in public practice should not have any relationship or combination of relationships with the client or any conflict of interest, which would impair integrity or independence. b. The client should accept responsibility for the statements. c. The professional accountant in public practice should not assume the role of employee or of management conduction the operations of an enterprise. d. Staff assigned to the preparation of accounting records ideally should not participate in the examination of such records. The fact that the professional accountant in public practice has processed or maintained certain records does not eliminate the need to make sufficient audit test.
‘Self-review threat’ is likely to impair independence of the auditor. As such, the auditor who is required to give his opinion on the financial statements should not be involved in the preparation of the book of accounts and the financial statements of his clients. Answer:
The professional services cannot and should not be offered under an agreement which entails that fees shall be payable on success fee basis. The professional fees to receive payment in direct proportion to the benefit receives by the client, may be tempted to exaggerate the advantage of his service or may adopt means, which are not ethical. It will have the effect of undermining his integrity and impairing his independence. Therefore, the remuneration based on a percentage of the profits on the happening of a particular contingency such as the successful outcome of an appeal in revenue proceedings is prohibited. Therefore, the action of firm to quote professional fees on a success fee basis cannot be treated as valid and member would be held guilty of professional misconduct under section 330 Part B of Code of Ethics, ICAN. Answer: CA‟s indicted of professional misconduct Answer Is In Next Page: Write short notes on the following:
Publicity under ICAN code of ethics:
Professional Negligence: Most VVI Question: May Be ii) The above ceiling does not apply to the smaller entities having turnover of less than 30 lakh rupees (Please Look the Code of ethics 2023)
iii) In case of partnership firm, every partner is entitled to above limits.
Answer As per Section 34 (10) of the Nepal Chartered Accountants Act 1997, members holding certificate of practice shall not base their remuneration as a percentage on the profit or any other uncertain results. Hence Mr. Gambler‘s act to fix fee with a client as a percentage of profit is in contravention of the above section and is not correct. Most VVI Question: May Asked: Most VVI Question: May Ask unless the loan or guarantee amount is immaterial, there is no safeguard available to Smart Bahadur Nepal. Most VVI Question : Most VVI Question Most VVI Question: Answer: a) i) ICAN's circular prohibits its members from tendering or quoting lower fee for any profession/services than the fee/remuneration of their previous auditor/professional accountant in public practice, without assigning and communicating reasonable grounds for such reduction to those charged with governance.
In this case, Mr. Mangal a locally based Chartered Accountant, accepted an audit assignment at a fee lower than that charged by the previous auditor, who was outstation based Chartered Accountant and had to spend a lot of time and money on travel which was included in his audit fee and was not charged by him separately. The motive of Mr. Mangal was not to get the work from previous auditor by accepting the audit assignment on lower fee i.e. undercutting of fee. Because, in considering whether variation in fees would constitute undercutting, the quantum of work, incidental and out of pocket expenses and other terms of appointment should be considered.
Since the previous auditor was stationed in another town and therefore, had to incur higher time and cost on account of conveyance, and previously fee was decided on a composite basis, inclusive of travelling expenses of the auditor, it cannot be said that Mr. Mangal has accepted an audit assignment based on undercutting of fees. Hence, Mr. Mangal will not be held guilty for misconduct. He has to communicate his grounds of quoting low fee to those charged with governance. Answer:
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Code of ethics is the set of detailed rules, guidelines, standards of conduct on which the ethical requirements for professional accountants in Nepal is founded. It is issued by the the Institute of Chartered Accountants of Nepal and is mandatory for all its members to observe in respect of the performance of professional services in Nepal. Answer: Answer:
Most VVI Question
Most VVI Question:
Question: Answer: Question: 6. Write short notes on the following:
e) Circumstances wherein the ICAN Council Member's Seat is deemed to remain vacant:
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