Chapter 14: Codes of professional ethics and regulatory issues Flashcards
Why accountants are required to have an ethical code?
- people/ public rely on them
- they hold a position which can access sensitive information
Name some source of ethical guidance
IESBA Code of Ethics, ICAEW Code of Ethics, FRC Ethical Standards
What advantages of the principle-based system? IESBA rely on a rule-based system or a principle-based system?
flexibility, broad interpretation, encourage valuation, allow variation in individual situations, can contain rules (some prohibitions)
What are the fundamental principles in IESBA Code of Ethics? State their characteristics
- integrity: straightforward + honest
- objectivity: no bias, conflict of interest, undue influence
- professional competence and due care” have knowledge, act diligently
- confidentiality: respect it
- professional behavior: comply with laws and regulations, avoid discrediting the profession
IESBA rely on a rule-based system or a principle-based system?
IESBA relies on principle-based system
What are aspect of independence?
- Independence of mind: give an opinion without undue influence
- Independence in appearance
Name threats identified by the IESBA Code of Ethics. Name threat is an addition according to FRC
- self-interest
- self-review
- advocacy
- intimidation
- management -> FRC
- familarity
What are the 2 general categories of safeguard identified by the IESBA Code of Ethics?
- safeguards created by profession, legislation, regulation
eg: training, CG regulations, external review - safeguards in work environment
eg: rotate senior mgt, consult to 3rd party, disclose to TCWG
What is the scope of ICAEW Code?
compulsory for its members for professional lives + personal life would discredit the profession
What does the ICAEW Code incorporate?
From the IESBA Code of Ethics
Which country do auditors need to comply with FRC Ethical Standards?
UK auditors
