Chapter 14: Codes of professional ethics Flashcards
What are the ethical codes that are aimed by accountants?
- ensure qualified/trainee accounts follow standards of prof. conduct
- help the profession act in public interest by providing approp. regulation
What sources are available to ICAEW accountants to follow ethics?
- international federation of accounts (IFAC)
- ICAEW code of ethics
- Financial reporting council (FRC)
What are the two types of approaches for ethical guidance?
Principle based (mostly this taken) Rules based
What does the principle based ethical guidance tell?
- use accountant judgement
- comply with spirit of guidance
- flexible can adopt to situation
What does the rules based ethical guidance tell?
- objective
- frequent updating needed
- accountant interpret narrowly
What are the IFAC code for ethics types of principle?
- Integrity: honest
- objectivity: not bias
- professional competence: approporiate
- confidentiality: not disclose
- professional behaviour: comply with laws
What is meant by the independence of the assurance?
- state of mind permitting to exprss without being affected by anyone
How does the IFAC code lay out the independence for accountant
- identify threats
- evaluate sig. threats
- apply safeguard (if there aren’t any: eliminate what causes threat, or decline engmt)
What are the threats to independent assurance work which are under the IFAC code?
- self interest
- self review
- familiarity
- adovcay
- initmidation
What are the two types of safeguards to threats of independence
- by professison, legislation
- work environment
How does the safeguard through profession,legisation and law safeguard from threats to independence?
- education and training
- CDP
- professional standards
- external reviews
How does the safeguard through work envirionment and law safeguard from threats to independence?
- review procedures
- consult with indpt. 3rd parties
- rotation of senior staff
- disclosing fees of those with goverance
Where else does the ICAEW code of ethics apply/
- trustee of charity
- honorary treasurer
What other additional threat mentioned in the IFAC code is included to the FRC ethical standard?
It includes the ones form IFAC code
- mgmt: auditor to close to mgmt views
