MIDTERM EXAM AUDIT, ASSURANCES, AND PROFESSIONAL ETHICS

UNIVERSITAS AIRLANGGA

Problem 1

From the facts below, point out where the deficiencies are and how you can recommend improvements
to an independent accountant who carries out Agreed Upon Procedures (AUP) on his client's Historical
Financial Information.

An independent accountant from KAP XYZ carried out an Agreed Upon Procedures ( AUP) engagement
on financial information with one of his clients, PT OgahRugi. The procedure implemented is mainly
aimed at believing the validity of PT Ogahrugi's debt. Since this is not an audit assignment or
engagement, The Accountant does not dispute the fact that he bought and owns 1 lot of shares in Pt
OgahRugi which is his client.

The procedures are carried out, because the procedure is very simple, to save time, the Accountant does
not consider it necessary to discuss with his client but immediately decides for himself what procedures
need to be done.

One of the initial steps of this AUP assignment is to conduct control testing on the client. In addition, the
independent accountant also performs certain procedures such as requests for information or analysis,
recalculation, observation, inspection, and confirmation requests.

From the results of these procedures, the independent accountant makes several conclusions. In
addition to formulating some conclusions about the results of procedures that are factual, accountants
also formulate some conclusions that are judgemental or contain interpretations

In this agreed procedure, the independent accountant concludes whether the financial information
prepared by the client, especially the Accounts Payable, has been presented under the Financial
Accounting Standards in Indonesia.

Accountants do not limit the distribution of AUP reports because they believe that AUP reports will be
useful when they can be viewed or accessed by the general public.

Answers:

Several suggestions and improvements can be made, namely:

1. Based on the case it is said that the accountant bought 1 lot of shares from his client company. In
my opinion, the auditor should not conduct an audit of Pt OgahRugi because of course, it has
violated the code of professional ethics that threatens the independence of an auditor. The
Auditor should not be allowed to buy shares of his client company because it will affect the
reports he produces
2. Related to the lack of communication between the accountant and his client, where the
accountant did not have a discussion related to the procedures he did and immediately decided
on their procedures. I think the accountant should have a discussion related to the procedures
he will carry out. Since this will make it difficult for the accountant to get information, it will be
difficult for the company to provide relevant information to him because there may be
procedures that they do not agree with.
 3. Also related to the conclusions. The conclusions produced by accountants are judgmental will
make the parties who need a report from the accountant is difficult to make decisions and will
also affect their decision-making. Should as an auditor should have conclusions that are
objective and not based on subjective views

Problem 2

a. Explain and give an example of what is meant by an Auditor expert according to SPAP
b. When or under what conditions is this Auditor expert used his services? What things should be
considered before choosing and when using this Auditor expert?
c. Do you agree that with the existence of this Auditor expert the Auditor's job will be easier
because the Auditor can share his duties and responsibilities in the audit with the Auditor expert
and can even rely entirely on the work of the Auditor expert who does have expertise (expertise)
in their field without the need to conduct independent checks on the work of the expert?
Explain your answer
d. How does the Auditor describe the role of the Auditor's expert in the Independent Auditor's
report?

Answers:

a. Expert auditors according to SA 620 are individuals or organizations that have expertise in other
than auditing and accounting who use their expertise to help auditors, for example, auditors
who conduct examinations at an oil company hire individuals who have expertise in the field of
Petroleum.
b. Use expert auditors when dealing with an area that has nothing to do with accounting.
Competence, objectivity, and capability must be considered when selecting an expert auditor.
c. Do not agree if it relates to relying entirely on the work of the expert tesebut. Auditors must
conduct independent checks related to their capabilities, competencies, and objectives. The
main thing here is the objectivity of the expert whether the expert has interests or relationships
that can threaten his objectivity
d. What should be explained is:
 The nature, scope, and objectives of the expert tesebut
 Roles and responsibilities of the expert
 The nature and extent of communication between the auditor and the expert

Problem 3

Regarding the applicable professional standards of Public Accountants (SPAP), explain some of the
similarities and differences between several types of services or engagements below (eg differences or
similarities in terms of the level of assurance provided, opinions or conclusions generated, the amount of
evidence collected, and others) :

A. Audit engagement on financial statements,

B. Engagement Review of Financial Statements, and
C. Commitment to carry out agreed-upon procedures on financial information

Answers:
Differences between audit engagement on Financial Statements, review engagement on financial
statements, and agreed upon procedure (AUP)

A. Audit engagement on financial statements

 Level Of Assurance: Assurance
 Result: expressed audit opinion
 procedure Level: Complex
 Number of Personnel: more than 4 people

B. Engagement review of financial statements

 Level Of Assurance: Non-Assurance
 Result: not expressing an opinion
 Procedure Level: Mild
 Number of Personnel: 1 person or more

C. Agreed upon procedures (AUP)

 Level of assurance: Non-assurance
 Result: not expressing an opinion
 Procedure Level: Mild
 Number of Personnel: 1 person or more