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Sangwani International, a listed company, manufactures and wholesales a wide variety of products including fashion clothes and audio-video equipment

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Sangwani International, a listed company, manufactures and wholesales a wide variety of products including fashion clothes and audio-video equipment. The company is audited by Salome, a firm of Chartered Certified Accountants, and the audit manager is Charles. The following matters have arisen during the audit of the group’s financial statements for the year to 31 March 20X4 which is nearing completion: During the annual physical count of fashion clothes at the company’s principal warehouse, the audit staff attending the count were invited to purchase any items of clothing or equipment at 30% of their recommended retail prices. The chief executive of Sangwani International, Armando Thyolo, owns a private jet. Armando invoices the company, on a monthly basis, for that proportion of the operating costs which reflects business use. One of these invoices shows that Darius Harken was flown to Florida in September 20X3 and flown back two weeks later. Neither Sangwani nor Salome have any offices or associates in Florida. Last week Armando announced his engagement to be married to his personal assistant, Kirsten Fennimore. Before joining Sangwani in January 20X4, Kirsten had been Salome’s accountant in charge of the audit of Sangwani.

Required: Identify and discuss the ethical issues raised in each of the scenarios and the responses required by the auditor in relation to these matters. ( 30 Marks)