Ch.4 Rules of professional conduct

Question 1

Key principles of the rule

Answer 1

Objectivity: maintain objective and independent state of mind when providing assurance services
Integrity and due care: act with integrity and due care in the performance of their professional activities
Professional competence: maintain knowledge and skill at a level required by CPA and do not take projects u dont have skills in
Confidentiality: maintain confidentiality with respect to affairs and business of client
Professional behaviour: behave in a way that maintains good rep and serves public interest

Question 2

Professional conduct rules

Answer 2

1. fees- before providing fees quote, obtain info of work to be performed. fees should be similar to prior aduits, or quotes that other auditors gave
2. advertising - do not give false/misleading ads, unsubstantiated claims
3. predecessor practitioner- ask the previous aduitor if there is any reason u shouldnt take the aduit. unless the client gives permisson, the ans will be yes or no.

Question 3

Independent

Answer 3

practitioner’s ability to act with objectivity, integrity, and professional skepticism, and falls under the rule of objectivity
-unbiased attitude
Threats to independence:
-Self-interest threats - financial interest in client - gon get a share of the company
-Self-review threats-position of having to form an opinion on his or her own work (eg. auditor worked there)
-Advocacy threats: occur where the practitioner (or his or her firm) is perceived to promote, or actually promotes, the position of the client : buy shares of my client
-Familiarity threats: close relationship exists between the practitioner and the client, creating an environment where it is difficult for the practitioner to behave with professional skepticism : gift exchange
-Intimidation threats: client intimidates the practitioner : gon fire u

Question 4

Safeguards

Answer 4

• professional safeguard: education and training provided by CPA regarding threats
• client safeguards: intro of an audit committee, implementation of policies
• practitioner safeguards : implementation of firm policies and procedures