Chapter 3 - Objectivity and resolution of ethical conflict Flashcards
What is a principles-based approach?
This means to use the conceptual framework to identify and evaluate threats to the fundamental ethical principles and put in place safeguards to minimise or eliminate these threats.
What is a rules-based approach?
The approach to professional ethics that means that you apply any rules exactly as stated regardless of the circumstances.
If you believe there is an ethical issue does an accountant have to take appropriate action?
Yes they must do in order to act ethically.
What is independence?
Freedom from control or influence of others
An accountant must exercise a certain level of professional _________ when making a professional judgement.
Scepticism
Professional scepticism is an attitude that includes what 3 things?
A questioning mind - no taking things for face value
Being alert to conditions which may indicate possible misstatement due to error or fraud
Making critical assessment of evidence
What does independence of mind mean?
Only taking into account points that are relevant to decisions to be made or work that i being undertaken - very similar to objectivity
What does independence in appearance mean?
Ensuring that to a third party the actions taken by the accountant appear to be objective and free from the influence of others
Should an accountant accept gifts?
They should use their professional judgement to decide whether to accept the gift. To give guidance if the gift is relativity low in value and is for the whole office or at least multiple people then it could be accepted. However, if the gift is for one accountant or is very high in value then it should not be accepted as it could affect objectivity or integrity.
What is an inducement?
An inducement is something that is offered to encourage or motivate a person to do something.
An inducement is made in an attempt to do what 3 possible things?
1) Influence actions or decisions
2) Encourage the accountant to act dishonestly to illegally
3) Obtain confidential information
What should an accountant do if they are concerned that inducements could threaten their principles?
Inform higher management
Inform a professional third party such as AAT. Taking legal advice may be required.
Tell a close friend or colleague if they are likely too benefit to warn them
Inform higher management in the organisation for which the above person works
Define loyalty
Being firm and not changing in your support for a person or an organisation, or in your belief in your principles.
How can you maintain an employee’s loyalty to the organisation?
Make the work a place have a culture of strong ethical values
Should it be an accountant’s first priority to support his or her organisation’s objectives and the rules and procedures drawn up in support of them, provided that the organisation is acting in a legal and ethical way.
Yes
