FALSE ASSURANCE - CASE ANALYSIS
This case analysis relates to a short video titled: "FALSE ASSURANCE". This video drama was produced by the Institute of Chartered Accountants England and Wales and aims to facilitate thought-provoking discussions about how accountants, auditors and company directors should act when faced with difficult situations.
The case revolves around a company called a fictitious company called D-Merton. TYSL Accountants are the external auditors of D-Merton.
Alex Frayn, the former Chief Financial Officer of, tells the story of two turbulent years in the life of that company. He explains how 0-Merton faced serious issues as a result of the actions and decisions of its executive directors, its board of directors and possibly the auditors themselves.
Brought to life by a cast of well-known television and film actors, you will see how the main characters deal with a series of dilemmas and difficult problems they encounter during the film, film splits into four parts.
Questions: Please answer all questions after fully viewing the False Assurance case video.
1. For each of the three persons as shown in the photographs below - please answer the respective questions posed below - after you have fully watched the video:
Person A-
Who is this man? What is his role?
What is he responsible for?
Who is he responsible to?
Person B -
Who is this lady? What is her role?
What is she responsible for?
Who is she responsible to?
Person C -
Who is this lady? What is her role?
What is she responsible for?
Who is she responsible to?
2. State the responsibilities of TYSL Accountants in relation to prevention and detection of frauds and errors in D-MERTON.
3. Identify and briefly describe TWO inherent risks, and TWO control risks of D-MERTON and explain how TYSL Accountants have responded to each risk, in planning the audit of D-MERTON.
4. Identify and explain THREE ethical issues which may affect the independence of TYSL Accountants' audit of D-MERTON and for EACH issue explain how it might be reduced to an acceptable level.
5. How would the cancellation of the product, S1 D system affect D-MERTON's financial position and the year end audit plan of D-Merton? How will it affect the value of the company's technology?
6. Do you believe that Sarah Hancock has exercised her duty of care as the audit partner? If your answer is YES, please explain your reasons. If your answer No, please explain reasons and what should she have done differently?
Attachment:- Assignment File.rar