AT - CODE OF PROFESSIONAL ETHICS Flashcards
Where is the Code of Ethics for Professional Accountants in the Philippines based from?
International Federations of Accountants’ (IFAC) Code of Ethics for Professional Accountants.
The Code of Ethics is divided into ___ parts. Discuss each part briefly.
The Code of ethics is divided into THREE (3) parts.
Part A - establishes the fundamental principles of professional ethics and conceptual framework that professional accountants shall apply.
Part B - Applies to Accountants in PUBLIC PRACTICE and how the conceptual framework applies to them
Part C - Applies to Accountants in BUSINESS and how the conceptual framework applies to them.
What are the prerequisite/fundamental principles enumerated in Part A of the Code of Ethics? Briefly discuss each.
- Integrity - honesty,fair-dealing and truthfulness. An accountant should NOT BE ASSOCIATED WITH INCORRECT/INCOMPLETE/MISLEADING STATEMENTS/INFORMATION.
- Objectivity - fair,intellectually honest and free from conflicts of interest/biases.
- Professional Competence and due Care - continued improvement of knowledge and skills to be able to render competent and professional service.
a. Attainment of professional competence - formal
education, examination and experience
b. Maintenance of professional competence - being
aware of developments affecting the profession
c. Due Care - performance of service in accordance with
technical and professional standards.
- Confidentiality - non-disclosure of any information without proper and specific authorization UNLESS there is a legal or professional right/duty to disclose. Also, non-usage of said information for the advantage of the accountant or a 3rd person.
- Professional Behavior - compliance with relevant laws and regulations and refrain from any conduct which might bring DISCREDIT to the profession.
What are the instances wherein confidential information may be disclosed?
- When there is permission from client/employer
- Disclosure is required by law (subpoena)
- Professional duty/right to disclose(defense in case of litigation)
What are the requirements under the Conceptual Framework of the Code of Ethics with regards to threats to compliance with fundamental principles?
- Identify threats to compliance with fundamental principles
- Evaluate significance of threats identified
- Apply safeguards, when necessary to eliminate threats or reduce them to an acceptable level.
What are the threats to compliance with the fundamental principles?
- Self-interest
- Self-review
- Advocacy
- Familiarity
- Intimidation
Explain the Self-interest threat to the fundamental principles.
It is the threat that a conflict of interest will inappropriately influence the professional accountant’s judgment/behavior.
Explain the Self-review threat to the fundamental principles.
It is the threat that a professional accountant will NOT OBJECTIVELY EVALUATE THE RESULTS of the previous judgment made or service performed in forming a conclusion about the subject matter of the engagement.
Explain the Advocacy threat to the fundamental principles.
It is the threat that a professional accountant will promote a client or employer’s position to the point that the professional accountant’s objectivity is compromised.
Explain the Familiarity threat to the fundamental principles.
It is the threat that a professional accountant will promote a client or employer’s position to the point that the professional accountant’s objectivity is compromised.
Explain the Intimidation threat to the fundamental principles.
It is the threat that the professional accountant will be deterred from acting objectively because of actual or perceived pressures, including undue influences.
What are safeguards?
Safeguards are actions or other measures that may eliminate threats or reduce them to an acceptable level. It has two broad categories:
- Safeguards created by the profession/legislation/regulation
- Safeguards in the work environment
a. Firm-wide safeguards
b. Engagement-specific safeguards
c. Safeguards within the client’s systems and
procedures
When accepting a client, what must an accountant in public practice do first in compliance with the fundamental principles of the Code of Ethics?
The professional accountant, BEFORE ACCEPTING A NEW CLIENT RELATIONSHIP, must consider WHETHER THE ACCEPTANCE WOULD CREATE ANY THREATS TO THE COMPLIANCE WITH THE FUNDAMENTAL PRINCIPLES.
When accepting an engagement, what must an accountant in public practice do first in compliance with the fundamental principles of the Code of Ethics?
Before accepting an engagement, the professional accountant must first determine WHETHER HE IS COMPETENT ENOUGH TO PERFORM THE SERVICE.
What must a professional accountant do when there is a change in professional appointment, such as said professional accountant in public practice is asked to replace another?
The incoming professional accountant must DETERMINE WHETHER THERE ARE ANY REASONS, PROFESSIONAL OR OTHER, FOR NOT ACCEPTING THE ENGAGEMENT, such as circumstances that may threaten compliance with fundamental principles.
