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Tim Taylor Case

Autor:   •  February 16, 2014  •  Essay  •  1,069 Words (5 Pages)  •  1,240 Views

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To: Professional Conduct Committee (PCC)

From: CA/CGA/CMA, Volunteer investigator

Re: Complaints about Tim Taylor (partner at Holmes LLP)

Professional Obligations


• There are several issues that need to be conscious of. First of all, we cannot access to the original working papers prepared by Taylor. It was incomplete and lack of accuracy to only rely on the Chairperson's review notes. Since the PHI, which was the major complaint, did not provide us the financial statements audited by Taylor, it is hard to judge how much influence Taylor exerted on them. Whether the verification process was already conducted by PHI was unknown.

• For the limited access to the legal expenses, it was difficult decide if PHI was not cooperative and if we were prohibited to investigate the legal issues.

• Due to the retirement of the Holmes LLP partner, the chance of tracing the payment made by Taylor was low. The verification towards the payment was hard to achieve. More than that, we had little chance to find out the reason behind this transaction.

Rules of Professional Conduct

• Our responsibility is to assure we are following the professional standard and the work with respect to criticize Taylor was appropriate and concrete.

• Our responsibility may extend to the report of deficiencies in the audit to PHI. The Institute potentially use our report as a complement to judge. We need to balance our responsibilities under the requirement of confidentiality to our clients with the litigious obligation to report deficiencies and violations. It is conservative to say our work is lack of verification and sounds to be premature. PHI may resist cooperating with us once they know we retained our right to report to the court.

Communication with the predecessor auditors

Taylor did not contact the predecessor auditors before accepting the engagement. Communication is required by all members as per rule of the ROPCs and Taylor was obviously not an exception. It was essential for Taylor communicating with his predecessor auditors about the previous management fraud issues. As a result, Taylor violated this rule.

Maintenance of professional Independence

It was obvious that Taylor did not maintain a good reputation as an auditor and fulfill a more general responsibility to serve the public interest:

• Evidence supports the complaint made by the anonymous whistleblower. First, $3,000 was written off without obvious and reasonable support and CCL indicated that collection should not be an issue.

• After checking Taylor's monthly bank statements, we found that several


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