The objectives of APES 110 include:  
 

• the establishment of a regulatory code within the profession to ensure the public retains its confidence in the behaviour of members.
• B. provision of a ‘set of rules’ with which members must comply if they wish to avoid sanctions
•  to improve quality control
•  All of the given answers are correct. The objectives of APES 110 include to maintain public confidence in the behaviour of the profession. The objective of the code is not to provide a set of rules that must be followed merely to avoid sanction, but rather to encourage appropriate behaviour. Quality control is covered in APES 320.

Corporate governance procedures are primarily concerned with ensuring:  
 

• the company will not be sued by its shareholders for inappropriate behaviour
• the entity operates at high levels of efficiency and effectiveness
•  all members of the board of directors attend all directors’ meetings.
• All of the given answers are correct.

An audit independence issue might be raised by the auditor’s participation in consulting services engagements. Which of the following statements is most consistent with the profession’s attitude towards this issue?  
 

•  Information obtained as a result of a consulting engagement is confidential to that engagement and should not influence the performance of the attest function.
• The decision as to loss of independence must be made by the client, based on the facts of the particular case.
• The auditor should not make management decisions for an audit client.
•  An auditor who is asked to review management decisions is competent to make these decisions and can do so without loss of their independence.

5. Ethical decision models should be:  
 

•  used as a framework for decision making
• used as a rigid set of rules that must be followed.
•  consulted only when the decision is a very difficult one
• disregarded as the fundamental ethical principles provided in APES 110 are all that are need to provide adequate guidance. Ethical decision models have been designed to assist in sound decision making. They provide a framework for decision making rather than a set of rules that should be followed rigidly. Ethical decision models are a framework and not a set of rigid rules and may be of assistance for any ethical decision. The fundamental ethical principles need to be complied with but they do not provide a framework for decision making. 

Which of the following non-audit services provided to an audit client would most likely result in a breach of independence?  
 

• The auditor provides advice on the accounting implications of adopting international accounting standards.
• The auditor prepares a valuation of the company’s television licences for inclusion in the financial report.
•  The auditor prepares the company’s tax return. 
• The auditor prepares an advertisement for the recruitment of the company’s new financial controller.

Which of the following statements about audit fees is correct?  
 

A.  The audit client may refuse to pay the audit fee if they are dissatisfied with the auditor’s opinion.   B.  The audit client has to pay whatever the auditor charges.   C.  The audit fee is set by the Corporations Act 2001.   D.  The auditor is entitled to a reasonable fee under the Corporations Act 2001.

• The audit client may refuse to pay the audit fee if they are dissatisfied with the auditor’s opinion. 
• The audit client has to pay whatever the auditor charges.
• The audit fee is set by the Corporations Act 2001.
• The auditor is entitled to a reasonable fee under the Corporations Act 2001.

Vintage Ltd has a year-end of 30 June 20X0. The audit work was completed and the auditor’s report signed on 3 September 20X0. On 1 October, the company requested the current auditor to resign so that the auditor of their parent company could take over the audit. The current auditors wrote a resignation letter dated 10 October that was received by the company on 15 October. This letter advised that the auditor’s resignation was effective from 3 September 20X0. The resignation letter was also forwarded to the Australian Securities and Investments Commission (ASIC), requesting its confirmation of the resignation. ASIC approved the resignation in a letter dated 31 October.   The effective date of the resignation is:    
 

• 3 September 20X0
• 10 October 20X0.
• 15 October 20X0.
• 31 October 20X0.

Independence means that the auditor:  
 

• must be impartial with respect to the client
• must adopt the attitude of a detective during the audit.
• has an obligation solely to third parties.
•  cannot provide any other professional services to an audit client.  

An auditor is independent if they are:  
 

• intelligent
• independent in fact and in appearance
• independent in fact and honest
• logical and consistent.

Emma Jones is about to begin a recurring annual audit engagement. As the continuing auditor, her independence would ordinarily be considered to be impaired if the previous year’s audit fee:  
 

• was only partially paid and the balance is being disputed
• has not been paid and will not be paid for at least twelve months.
• has not been paid and the client has filed voluntary bankruptcy.
• was settled by litigation.