Chapter 2

Question 1

key reason accountancy bodies produce ethical guidance

Answer 1

public interest - the public rely on FS and rely on the independence of the auditors opinions

Question 2

5 fundamental principles

Answer 2

professional competence and due care
professional behaviour
confidentiality
integrity
objectivity

Question 3

5 threats

Answer 3

self interest
self review
advocacy
intimidation
familiarity

Question 4

3 actions that address the 5 threats

Answer 4

eliminating circumstances that allow threats

apply safeguards where possible

declining or ending the professional activity

Question 5

what is a public interest entity

Answer 5

a listed entity
an entity which is defined as a public interest entity
if the audit is required by regulation to be an audit of a public interest entity

Question 6

3 categories of professional scepticism

Answer 6

integrity
professional competence and due care
objectivity

Question 7

integrity definition ( professional scepticism)

Answer 7

being straightforward and honest when raising concerns

pursuing inquiries about inconsistent information, seeking further audit evidence to address concerns

Question 8

professional competence and due care definition ( professional scepticism)

Answer 8

designing and performing appropriate audit procedures

applying knowledge to materiality that is specific to the clients industry

Question 9

objectivity definition ( professional scepticism)

Answer 9

recognising circumstances that could cloud your objectivity

Question 10

can auditors accept management responsibility for clients

Answer 10

no