dolution

Ms. Amna, a partner in Al Raffah Audit Firm, was deputed as a Practitioner of Mazoon Company to review the internal control system of the company. She conducted the review and after verification of relevant records, concluded that the internal control system of the company is sound. Mazoon company was happy with her work. She also developed friendships with the top officials and employees of the company. The next year, Ms. Amna was appointed as the external auditor of Mazoon company. When she reviewed the books of accounts of the company, it was found out that the company had charged depreciation more than the allowed rates and thereby avoided tax on their business profits. Mr. Omar, the Chairman of Mazoon company demanded her not to mention this in her audit report as this information will affect the market value of his company’s shares. Ms. Farida, the CEO of Mazoon company asked Ms. Amna to modify her report otherwise her fees will be delayed. Ms. Iman, the Internal Auditor of the audit client met Ms. Amna and reminded her about the lunch they had once in the office and humbly requested her not to mention this manipulation in the independent audit report. Ms. Amna is very confused and faces an ethical dilemma in the current situation.

Q1:Describe the threats to the fundamental principles of professional ethics faced by Ms. Amna in the Mazoon company?

Q2: Advise Ms. Amna as to what safeguard she has to take in the current situation.