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Code of Ethics for PA, if insufficient long cooling period being observed…
Code of Ethics for PA
Confidentiality
- disclose info if consent given from client / employer, unless legal (obliged to disclose) / prof right or duty to disclose (voluntary disclose)
- continues even after end of relationship
Objectivity
- will determine independence of PA
- decision made free from:
- bias
- conflict of int
- undue influence from other parties
Professional competence & due care
- will determine whether a PA is negligent or not
- maintain prof knowledge & skill
- PA participate in continuing prof education program (CPE)
- act diligently in accordance with applicable technical & prof stds
- prof competence
- attainment (graduate from prof course)
- maintenance (CPE program)
Integrity
- straightforward, honest, fair dealing, truthfulness
- :red_cross:associated when info:
- materially false / misleading statement
- furnished recklessly
- omit / obscures
- :red_cross:breach of fundamental principle if provides modified report
Professional behaviour
- comply with laws & regulations
- avoid actions discredit profession
CF in determining auditor's independence
- Identify threat to independence
- Evaluate significance of the threats
- Respond to threats by applying safeguards to mitigate the effects
Familiarity
- relates to relationship
- financial
- personal
- family
- applicable if personnel concerned are senior personnel in the firm / client co
Advocacy
- promote assurance client's position / opinion
Self-interest
- related to familiarity threat
- need not be the auditor himself / herself
- relevant for parties who are having relationship with PA
Self-review
- the outcome of non-audit services are included in FS & subject to audit
- member of assurance team was previously director / officer of assurance client
Intimidation
- threat of replacement over disagreement with accounting principle
- pressure to reduce extent of work performed in order to reduce fee
- junior auditor being asked to challenge / question the representation made by FD
Safeguards
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Within assurance client
- person other than mgt (audit committee) approve appointment
- employees competent to make managerial decision, avoid decision made by auditor
- policies & procedures in fair financial reporting
- corporate governance structure (audit committee) provide oversight & communications
Within the firm
Firm-wide safeguards
- firm-leadership stresses the importance of independence & act in public int
- monitor QC
- written documentation independence policies
- self-declaration make by auditor regarding their int / relationship in the client co
- manage reliance on revenue from single assurance client
- using different partners & teams with separate reporting lines for provision of non-assurance services to assurance client
- timely communication of firm's policies & procedures
- senior mgt (partner) overseeing adequate functioning of safeguard system
- advising partner (ethic partner) & prof staff must be independent
- whistle-blowing
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:red_flag:Professional issues
- risks (IR / DR)
- integrity of client mgt
- ctrl environment
- QC (eg. incompetent staff being assigned to perform audit)
- implication on audit report
- expectation gap