explain the key ethical matter regarding Chem Safe and its management that you should consider before making the decision to accept the engagement.
Case 1
During the financial year 2020/2021, you are one of the audit partners with Summit and Associates CAs, a large
and experienced audit firm.
You have been approached to accept the audit of Chem Safe Ltd (Chem Safe), a medium-sized chemical
manufacturer. The manufacture of the chemicals results in highly toxic waste and Chem Safe is currently under
investigation by the Environmental Protection Agency for a significant spill of toxic chemicals into a nearby river.
The media have reported that senior employees were allegedly involved in trying to cover up the spill.
Case 2
Chem Safe Ltd (Chem Safe) imports a number of pharmaceutical products. In order to hedge its foreign
currency transactions, Chem Safe entered into a number of forward rate agreements this year. Prior to this time
Chem Safe had had little exposure to derivative instruments, but a series of bad experiences resulting from
fluctuating exchange rates convinced the company that a hedging strategy was necessary…
ACT303 PRINCIPLES OF AUDITING Assignment – S121 (3)
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