Please enable JavaScript.
Coggle requires JavaScript to display documents.
2-Professional and ethical duty of the accountant - Coggle Diagram
2-Professional and ethical duty of the accountant
What are ethics?
Code of moral principles
With respect to what is right and what is wrong
Are not necessarily enforced by law although the law incorporate moral judgments
Ethical principles in corporate reporting
Fundamental principles
Professional competence and due care
To maintain professional knowledge and skills at the level required to ensure client receives competent professional service
Based on current developments in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standards
Confidentiality
To respect the confidentiality of info acquired
Not to disclose any info to third parties without proper and specific authority unless there is legal/ professional right or duty to disclose
Do not use the info for personal advantage of professional accountant or third parties
Objectivity
Not to allow bias, conflict of interest or undue influence of others to override professional and business judgments
Professional behavior
To comply with relevant laws and regulations and avoid any action that discredit the profession
Integrity
Honest and straightforward
Threats to fundamental principles
Advocacy
Accountant promotes a client's or employer's position to the point that their objectivity is compromised
Familiarity
Due to a long or close relationship with a client or employer, the accountant will be too sympathetic to their interests or too accepting of their work
Self-review
Accountant will not appropriately evaluate the results of previous judgment made or services performed by themselves or others within their firm, on which the accountant will rely when forming a judgments as part of providing a current service
Intimidation
The accountant will be deterred from acting objectively of actual or perceived pressure, include attempts to exercise undue influence over the accountant
Self-interest
Financial or other interests
Safeguards against threats
Created by the profession, legislation and regulation
Corporate governance
Client/ accountancy firm's own systems and procedures
Educational training and experience requirements for entry into the profession, together with continuing professional development
Ethical consideration in FR
Professional competence and due care
Directors and accountant must keep their knowledge up to date with the relevant standards and other regulations
Reasons of breach
Inadequate time, info, experience, training, education and resources
Integrity and objectivity
Reasons of breach
Financial interest
Inducement to encourage unethical behaviour
Associated with misleading info
Members should not be associated with reports, returns and communications or other info where they believe that the info
Contains a materially misleading info
Contains info or statements furnished recklessly
Has been prepared with bias
Omits or obscures info required to be included where such omission or obscurity would be misleading
IAS 1 and fair presentation
Goes further than the requirement of the code which requires that members should not be associated with misleading info
IAS 1 requires that entity must present fairly
Representing faithfully the effects of transactions
Will be the case if IFRS is adhered to
Departures from the standards are only allowed
In extremely rare cases or
Where compliance with IFRS would be so misleading as to conflict with the objectives of FS that is to provide info that is useful to users
Expands on this principles as follows
Compliance with IFRS should be disclosed
FS can only be described as complying with IFRS if they comply with all the requirements of IFRS
Use of inappropriate accounting policies cannot be rectified by either disclosure or explanatory material
Compliance is necessary but not sufficient for fair presentation
Fairness is an ethical concept, directed at giving the users of FS to see the full picture of an entity's position and performance
Framework for decisions
It is to help the members make ethical decisions in a wide range circumstances
What are the relevant facts?
What ethical issues involved?
Which fundamental principles are threatened?
Do internal procedures exist that mitigate the threats?
What are the alternative course of action?
Can you look at the mirror after making decisions?