Chapter 1 - Ethics Flashcards
What are the five fundamental principles of the IESBA ‘Code of Ethics for Professional Accountants’?
- Integrity
- Objectivity
- Professional competence and due care
- Confidentiality
- Professional behaviour
What is the meaning of integrity?
To be straightforward and honest in all professional and business relationships.
What is the meaning of objectivity?
To not allow bias, conflict of interest or the undue influence of others to override
professional or business judgements.
What is meant by professional competence and due care?
To maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques and act diligently in accordance with applicable technical and professional standards.
What is meant by confidentiality?
To respect the confidentiality of information acquired as a result of professional
and business relationships and, therefore, not disclose such information without proper and
specific authority unless there is a legal or professional right or duty to disclose, nor use the
information for their personal advantage or the advantage of third parties.
What is meant by professional behaviour?
To comply with relevant laws and regulations and avoid any action that
discredits the profession.
What are the five categories of threats to compliance with the fundamental principles of the IESBA ‘Code of Ethics for Professional Accountants’?
- Self-interest threats
- Self-review threats
- Advocacy threats
- Familiarity threats
- Intimidation threats
What is meant by self-interest threats?
Which may occur as a result of the financial or other interests of a professional accountant or of an immediate or close family member.
What is meant by self-review threats?
Which may occur when a previous judgement needs to be reevaluated
by the professional accountant responsible for that judgement.
What is meant by advocacy threats?
Which may occur when a professional accountant promotes a position or
opinion to the point that objectivity may be compromised
What is meant by familiarity threats?
Which may occur when, because of a close relationship, a professional
accountant becomes too sympathetic to the interests of others.
What is meant by intimidation threats?
Which may occur when a professional accountant may be deterred
from acting objectively by actual or perceived pressures, including attempts to exercise
undue influence over the professional accountant
What are six safeguards that may eliminate threats or reduce them to an acceptable level?
- 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, communications
or information produced by a professional accountant.
What are two safeguards that may increase the likelihood of identifying or deterring unethical behaviour?
- Effective, well-publicised complaints systems operated by the employing organisation, the profession or a regulator, which enable colleagues, employers and members of the public to draw attention to unprofessional or unethical behaviour.
- An explicitly stated duty to report breaches of ethical requirements.
What are six factors a professional accountant should consider when initiating an ethical resolution process?
- relevant facts
- relevant parties
- ethical issues involved
- fundamental principles related to the matter in question
- established internal procedures
- alternative courses of action
