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code of ethics - Part A - General application of the code (all warrant…
code of ethics - Part A - General application of the code (all warrant holders)
general
imp of following code/ how a profession is distinguished:
master intellectual skill - thru edu and training
adhering to common code of conduct and values
acceptance of duty of society as a whole
code of ethics is an OBLIGATION
responsibility of acc profess to act in PUBLIC INTEREST
duty of warrant holder:
satisfy needs of indv client/ employer
observe + comply w/ code - to act in public interest
5 Fundamental Principles - VIMP FOR EXAM
warrant holders must abide by them
include:
integrity
truthful and straightforward
shall not associate/ disassociate him/herself w info where warrant holder believes contains:
materially false/ misleading statements
statements/ info furnished recklessly
misleading omissions/ obscurities
if warrant holder provides modified report w.r.t matter which requires disassociation, they will not be deemed as a breach of code
objectivity
no bias/ conflict of interest/ influences
reach a conclusion in YOUR OWN NAME
profess competence + due care
profess competence
be capable of undertaking audit
know + abide by reg
work based on current dev, leg and techniques
due care
act diligently
act acc. to leg and standards
confidentiality
do not disclose any info (even if to your adv) UNLESS OBLIGED TO
any info that you are obliged to disclose needs to be disclosed w protection - ex. controls on passwords, comps, networks, firewalls
cases there may be a legal/ profess duty to disclose:
stated in contract w client that u have the right to
the need to report situations of suspision of financial breaches to competent authorities
ex. money laundering
ex. auditor finds suspicion of stolen money/ money from drugs
court can exhonorate auditor from legal secrecy
profess behaviour
comply w laws and acc reg
avoid actions that discredit profess
5 threats and safeguards - VIMP FOR EXAM
threats - may impact the 5 fundamental principles
self-interest threat
self-review threat
advocacy threat
familiarity threat
intimidation threat
fear of client/ employer
ex. client is a criminal and may go to extremes to get his way and afraid to go against his will - as a professional we have to avoid the situation where I become the victim
not act objectively bc of pressures/ influences
knowing your client/ employer v well - friends/ family
leads to warrant holder over sympatetic
ex. adjusting tax bc of high profits
dont make the client's position your own and make a case which is not objective
avoid becoming the advocate of your client
warrant holder will promote client/employer's position - objectivity is compromised
preparing and auditing the accounts I prepared of the client
warrant holder will not appropriately evaluate result of (his/her own/ person within the warrant holder's firm's) previous judgement on service to client
personal/financial influence may preclude one of conducting their job appropriately - influence judgement and behaviour
ex. my wife's company shows profits that are higher what they really are. the husband accountant has the interest for the wife to give the false statements to the bank to get more money
influence to do the wrong thing
safeguards
def: actions that may eliminate/ reduce threats
divided into:
created by profess, leg or reg
include:
edu, training, exp req for entry into profess
continuing profess dev req
expected to cont learning even after graduation
corporate governance reg
monitoring - accounting firms are inspected external reviews
ex. capital market rules
professional standards
profess/ reg monitoring + disciplinary procedures
external review by legally empowered third party of the reports, comms and info produced by warrant holder
in work env
effective, well-publicised complaint systems operated by employing org/profession/ regulator
enables colleagues/ employers and members of the public to draw attention to unprofess or unethical behaviour
duty to report ethical breaches
conflicts of interest
is a threat to objectivity mainly
interests of warrant holder w.r.t matter and interests of part of whom warrant holder undertakes profess activity related to that matter in conflict
when warrant holder takes profess activity related to matter/parties whose interests w.r.t that matter r in conflict
ethical conflict resolution
warrant holder may be required to resolve conflict in complying to 5 fundamental principles
factors in conflict resolution process:
relevant facts
ethical issues involved
fundamental principles related to matter in question
established internal procedures
alternative courses of actions
after determining factors, warrant holder decides on appropriate course of action and their consequences
can consult w other appropriate ppl for advice
communicating w those charged w governance
warrant holder shall determine the appropriate ppl within entity's gov structure w whom to communicate
keep in mind:
nature and imp of circumstance
the actual circumstance to be discussed
whether comms with all those charged w gov is also necessary and not only a subgrp - so they are all adequately informed