Introduction

 The problem of the professional competence and due care

First of all, it’s the professional requirements for the professional auditors to perform the
profession service with the due care, competence and diligence with the best knowledge,
training, and skills to ensure that a client receive the best services which is professional, up-
dated in practices. moreover after assigning of the staffs to the audit work should be done or
staffed by the person who have obtain and maintain the skills and competence required to
enable them to fulfil their responsibilities on the audit engagement that they must have a
degree of training and proficiency required in the circumstances that means the supervisor
who are the auditor and the assistants should look the skills and competence every staff so
that the work performed would be performed by the audit by the audit firm meets the
appropriate standard of quality . coming to the scenario of Matatizo and partners auditing
firm its observed some of the staffs five journal auditors which are all fresh from school that
means they do not have training on auditing working this is evidenced by “all of them have
graduated with the a diploma in accounting and have completed their certified public
accountant(CPA).the core workers consist of five (5) junior auditors who are the diploma
holders in accounting and are fresh from school ,two secretaries with an ordinary level
certification” . on top of that the auditing require the auditors to have both accounting
techniques and the audit techniques in performing their duties but the junior auditors of the
firms seem not to have the techniques and experience of auditing

Rotation of audit firm

It is mandatory for the company to be audited by one auditing firm for a period of at least five
years. The reason of this is to control occurrence of familiarity between the auditing firm and
company, the familiarity affects independence of the auditor ability to form an opinion and
report facts without any bias, also violate the integrity and objectivity of auditor while
undertaking the audit engagement and be independent of those parries he or she serving. In
the scenario, this problem emerges when Matatizo and Partners Auditing Firm enters into
contract with Matazamio Company and appointed as external auditor of that company to
indefinitely provide auditing and consultation services to Matazamio Company. The contract
period exceed the required period as stipulated by laws between the company, therefore after
some certain years the independence of the auditor will be affected due to the familiarity
between this company. The fact is the Matazamio Company as being the only client bringing
large consultation fees to the audit firm that’s why it was easy for the company to accept such
offer. Hence the auditing firm will work towards the interests of the Matazamio Company
while fails to integrated well financial statements of the company and the scope of auditing
will be violated.

Auditing family company

this problem is observed in the scenario as it says, Matazamio Company is a sister company
of Matatizo, as it is established by the same partners and it is currently managed by Mr.
Malalamiko, as the appointed senior auditor at Matatizo and partners Auditing Firm this is
observed as the problem because Matazamio owning the company or being partner of the
company is seen to be in relationship as a family member with Matatizo as the partner in the
Auditing firm thus is Auditing firms are not required to audit companies in which have
relationship with the company either being a partner of the company, family membership
between the two parties or friendship with each part, this is the way to prevent threats and
other challenges that will be caused by auditing the company in relationship and preventing
to violate principles guiding auditing work and performance thus making the audit work to be
meaningful, understandable, clear and give out the required expectations on the audit work
performed.

threats, conflicts of interest

due to the problem that Matatizo have relationship with Matazamio and Malamiko thus it
leads to the conflict of interest thus leading to threatening or impair the professional of an
auditor thus reducing integrity and independence due to auditing clients who are in
relationship

principle, independence and integrity

with independence an Auditor should be able to form opinions, make conclusion and report
the facts with absence of bias or without any bias, thus with the above problem auditing the
family company, an Auditor will not be able to give out opinions, make conclusion and report
the facts without bias as the auditor will not be independent as his or her audit work will
depend on the company he or she is auditing because of familiarity and partnership he or she
will have to favor the company thus violating his or her independence and sometimes not
being honest and straight forward in conducting of all audit work and professional services
so as to fulfil the his or her interest as the partner and the company that is audited.
Solution,

Matatizo and partners Auditing firm should stop auditing Matazamio company as it currently
owned by Malalamiko as are his friends and also Matatizo is seen as the partner of the
company, this will help to reduce the conflict of interest as caused by auditing his partners
and friends rather should find other clients to audit so as to protect and in line with the
principle of independence and integrity.