Chapter 3

Question 1

Auditor’s 3 Areas of Responsibility to Society

Answer 1

1. Moral Responsibilities
2. Professional Responsibilities
3. Legal Responsibilities

Question 2

Professional Responsibilities (Ethics)

Answer 2

Rules and principles for the proper conduct of an auditor in his/her professional work

Question 3

Ethics

Answer 3

Branch of philosophy which is the systematic study of reflective choice of the standards of right and wrong

Question 4

Ethical problem

Answer 4

Situation when you must make a clear choice among alternatives

Question 5

Critical Thinking

Answer 5

Process of identifying the primary accounting, auditing and ethical objectives and principles to be relied upon in a particular situation with all the principles being logically consistent with the objectives of financial reporting

Question 6

2 Viewpoints of Ethical Behaviour

Answer 6

• Produces the greatest good
• Conforms to rules and principles

Question 7

Reflective Choice Steps

Answer 7

1. Recognize a decision problem
2. Collect evidence
3. Think about rules of behaviour
4. Consider probable outcomes
5. Analyze the situaiton
6. Take action

Question 8

Professional Judgement Steps

Answer 8

1. Identifying crucial issue
2. Gathering information on all significant assertions
3. Identifying possible alternative courses of actions
4. Evaluating alternative courses of actions
5. Deciding on the best course of action

Question 9

Monistic Theories

Answer 9

Assume that universal principles apply regardless of the specific facts

Question 10

Pluralistic Theories

Answer 10

Assume there are no universal principles and that the best approach is to use the principles that are most relevant to a particular case

Question 11

Imperative Principle - Kant

Answer 11

Universal principles must always be followed regardless of consequence

Question 12

Principle of Utilitarianism

Answer 12

Ultimate criterion of an ethical decision is the balance of good over evil consequences produced by an action, greatest good for greatest numbers is all that matters

Question 13

CPA Handbook 5 Fundamental Principles

Answer 13

1. Professional behaviour
2. Integrity and Due Care
3. Professional competence
4. Confidentiality
5. Objectivity

Question 14

Integrity

Answer 14

Duty to be honest and conscientious in performing professional services

Question 15

Objectivity

Answer 15

Hold themselves free of any influence, interest, or relationship that impairs the member’s professional judgement

Question 16

Independence

Answer 16

Objectivity in the case of an assurance engagement