5. Osborne - Principles of professional ethics Flashcards
Principles of Professional Ethics (CH5)
Define Professional Ethics.
The professional ethics of an organisation are the moral principles or standards that govern the conduct of the members of that organisation.
Principles of Professional Ethics (CH5)
What do professional accounting bodies base their code of ethics on?
All professional accounting bodies including AAT base their code of ethics on the International Ethics Standards Board for Accountants (IESBA) code of ethics.
The AAT code applies to all Fellows, Full, Affiliate and Student Members.
Principles of Professional Ethics (CH5)
What are the 5 Fundamental Ethical Principles? (PIPCO)
- Integrity
- Objectivity
- Confidentiality
- Professional Competence and Due Care
- Professional Behaviour
PIPCO.
Principles of Professional Ethics (CH5)
What is Integrity? (PIPCO)
Quality of being straightforward and honest in all professional and business relationships and when performing professional work.
Principles of Professional Ethics (CH5)
What is Objectivity? (PIPCO)
Sticking to the facts and not allowing prejudice or bias or influence decision making.
Principles of Professional Ethics (CH5)
What is Professional Competence and Due Care? (PIPCO)
Maintaining high levels professional knowledge and skill to ensure that a professional service is given.
* Professional Competence: keeping up-to-date with developments in the accounting profession.
* Due Care: - Ensuring that the quality of the work performed meets the high standards expected of the accounting profession.
Principles of Professional Ethics (CH5)
What is Confidentiality? (PIPCO)
- Confidential information shall not be used for the personal advantage of the member or third parties.
- The duty of confidentially extends even after the relationship with employers has ended.
Principles of Professional Ethics (CH5)
When is it acceptable to Disclose Confidential Information?
- When authorised by a client or employer.
- When disclosure is required by law.
- Where there is a professional duty to disclose.
Principles of Professional Ethics (CH5)
When does an accountant have a Professional Duty to Disclose?
A. To comply with a quality review of an International Federation of Accountants (IFAC) or other professional bodies.
B. To respond to an inquiry by the professional accounting body or by a regulatory body of an ethical, investigatory or disciplinary nature.
C. To protect the professional interests of the accountant in legal proceedings.
D. To comply with technical standards and ethical requirements.
Principles of Professional Ethics (CH5)
What is Professional Behaviour? (PIPCO)
Complying with relevant laws and regulations and avoiding any action that brings the profession into disrepute.
Principles of Professional Ethics (CH5)
What does Professional Scepticism involve?
1. A questioning mind.
2. Being alert to mistakes which may indicate possible error or fraud.
3. Making critical assessment of evidence that is provided.
Principles of Professional Ethics (CH5)
When Professional Scepticism important?
Where something is vague, or there isn’t enough information to back it up, the accountant must investigate further until they are happy that the information is correct.
Failure to do this may compromise the objectivity of the accountant and leave them open to accusations of bribery or fraud.
Principles of Professional Ethics (CH5)
Define Fraud.
Fraud can be defined as wrongful or criminal deception intended to result in financial or personal gain.
Principles of Professional Ethics (CH5)
What are the “3 classes” of Fraud in the Fraud Act 2006?
1.Fraud by false representation - where a person makes any representation which they know to be misleading.
2. Fraud by failing to disclose
information — where a person fails to disclose any information to a third party which he/she has a legal duty to disclose.
3. Fraud by abuse of position — where a person occupies a position where they are expected to safeguard the financial interest of another person, and abuses that position.
