CHAP 14: CODE OF PROFESSIONAL ETHICS & REGULATORY ISSUES Flashcards
Why auditor need ethic
- Professional accountants have a responsibility to consider the public interest and maintain the reputation of the accounting profession.
- The IESBA and ICAEW Codes of Ethics help accountants to meet these obligations by setting out ethical guidance to be followed.
- Key reason accountants need to have an ethical code is that people rely on them and their expertise.
- It is critical that accountants are independent.
- Compliance with a shared set of ethical guidelines gives protection to
accountants as well as they cannot be accused of behaving differently from other accountants.
Source of ethical guidance
ICAEW member, trainees,employees of member firm phải tuân thủ ICAEW code of ethic, influenced by guidance of IFAC, which actually issued by IESBAA (a body of IFAC) as the IESBA Code
of Ethics for Professional Accountants
UK auditor còn phải tuân thủ FRC, cũng adopted from IFAC
Advantages of principle base over rule base
1,Active consideration
and demonstration
of conclusions
Actively consider independence for every given situation, rather than just agreeing a checklist of forbidden items.
=> responsible conclusion has been reached about ethical issues.
2,Broad
interpretation of
ethical situations
A principles-based framework prevents auditors interpreting legalistic requirements narrowly to get around ethical requirements. There is an element to which rules engender deception whereas principles encourage compliance
3,Individual situations
covered
A principles-based framework allows for the variations that are found in individual situations. Each situation is likely to be different.
4,Flexible to changing
situation
A principles-based framework can accommodate a rapidly changing
environment, such as the one that assurance providers are involved in.
5,Can incorporate
prohibitions
a principles-based framework can contain certain prohibitions ( rules) where these are necessary.
Principle based có rule k
The ethical guidance we shall look at tends to be in the form of a
principles-based framework (as being a framework of principles rather than aset of rules). However, it contains some rules.
Key issue của IESBA Code of ethics
If imposible to reduse threat to an accceptable level, the threat must be avoide by not accepting engagement
5 fundamental principle
- Integrity. To be straightforward and honest.
- Objectivity. Not to compromise professional or business judgments because of bias, conflict of interest or undue influence of others.
- Professional competence and due care. To:
o attain and maintain professional knowledge and skill; and
o act diligently and in accordance with standards. - Confidentiality. To respect the confidentiality of information acquired.
- Professional behaviour. To comply with relevant laws and regulations and avoid any conduct that the professional accountant knows or should know might
discredit the profession.
Các lưu ý khi auditor muốn marketing themself
In marketing and promoting themselves and their work, professional
accountants shall not make:
* exaggerated claims for the services they are able to offer, the qualifications they possess, or experience they have gained; or
* disparaging references or unsubstantiated comparisons to the work of others.
2 principle quan trọng với trainees
Confidentiality và professional and due care
3 bước đối mặt với threat
1, Identify threat with fundamental principle
2,Evaluate threat
3,Reducing threat at an acceptable level by appply safeguard
Nếu k dùng safeguard được thì hoặc là eliminate the interest hay activities cause threat hoặc là decline engagement
Phân biệt independence in mind and in appearance
Independence of mind: The state of mind => allow an individual to act with
integrity, and exercise objectivity and professional scepticism.
Independence in appearance: The avoidance of facts and circumstancesthatare so significant that a reasonable and informed third party would be likely toconclude that a firm’s, or an audit team member’s, integrity, objectivity or
professional scepticism has been compromised.
Degree of indepdence được yêu cầu ntn với từng loại khách hàng và dịch vụ
- Highest: audit engagement
-Less stringent requirement( bớt nghiêm ngặt hơn): non-audit engagement của audit client hoặc các dvu đối với non-audit client
Có mấy cách phân loại threat
- Theo IESBA thì có 5 threat, theo FRC thì có thêm management threat
Phân biệt 2 loại safeguard
Safeguards created by the profession, legislation or regulation
Educational training and experience requirements for entry into the profession Continuing professional development requirements
Corporate governance regulations
Professional standards
Professional or regulatory monitoring and disciplinary procedures
External review by a legally empowered third party of the reports, returns, communication or information produced by a professional accountant
Safeguards in the work environment
Involving an additional professional accountant to review the work done or otherwise advise as necessary
Consulting an independent third party, such as a committee of independentdirectors, a professional regulatory body or another professional accountant
Rotating senior personnel
Discussing ethical issues with those in charge of client governance
Disclosing to those charged with governance the nature of services provided and extent of fees charged
Involving another firm to perform or re-perform part of the engagement
Independece của audit team nên kéo dài bao lâu
- Trong suốt preiod of engagement, audit team và firm phải independent
- Period of engagement sẽ bắt đầu tù khi công việc bắt đầu cho đến khi final report được produced
- Đối với recurring audit(kiểm toán định kì) thi tính independence sẽ chỉ dừng lại khi termination of contract( kết thúc hợp đồng)
IESBA,ICAEW,FRC là rule base hay principle base
principle base
