Chapter 9: The Professional Accountant Flashcards
What is a profession?
An occupational area characterised by:
- the mastering of specialised skills during a period of training
- governance by a professional association
- compliance with an ethical code
- a process of certification before being allowed to practise
What are some common attributes that distinguish professions from other occupations?
- Formal regulatory process
- Great degree of autonomy
- Professional values (members must adhere to)
- Self-regulation
- Co-regulation (self and government)
What is the accountancy profession concerned with?
The accountancy profession is concerned with the measurement disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and other decision makers make resource allocation decisions
What is the accountancy profession key to maintaining?
The accountancy profession is key to maintaining the effective working of capital markets and upholding the public interest (via ensuring public confidence in financial reporting and auditing)
What roles do accountants perform?
- Public practice
- Business (public or private sector)
What is public practice?
Public practice: firm of accountants providing services
Reserved areas:
- insolvency
- investment business
- audit and assurance
- probate
Other accountancy areas:
- Accounting
- Taxation
- Corporate Finance
- ICT
- Management Consultancy
- Forensic Accounting
- Financial Management
Where can accountants work in business?
Sectors:
- Commerce
- Industry
- Service
- Public Sector
- Education
- Not for profit (Charity)
What roles can accounts work in within the business sector?
- Transaction recording
- Management accounting
- Financial reporting
- Treasury management
- Administration
- Pensions
What is still expected of accountants within the business sector?
- Still expected to uphold professional principles - particularly professional competence and due care
- Accountants need to be able to form reasoned judgements in all work they do even if they are using work of other professionals - e.g. company secretary, chartered surveyor, HR professionals, IT specialists etc
What are the three basic aspects of the professional accountant’s work?
- Maintaining control and safeguarding aspects
- Financial management
- Financial reporting
What is meant by ‘maintaining control and safeguarding assets’?
The professional accountant will seek to ensure that assets are kept safe through complete, timely, and accurate recording of transactions (includes internal controls such as an audit committee)
What is meant by ‘financial management’?
The management of all the processes associated with the raising and use of financial resources in a business (recording transactions, debt and equity - supports good corporate governance)
What is meant by ‘financial reporting’?
The transactions and activities of the business, as represented in its accounting records, must be reported to external stakeholders (SOFP, SPL)
What two principles underlie everything a professional accountant does?
- Professional ethics
- Accounting principles
What are the five professional principles of the ICAEW Code of Ethics?
- Confidentiality
- Integrity
- Objectivity
- Professional Competence and Due Care
- Professional Behaviour
What is meant by ‘Confidentiality’ within the Code of Ethics?
Confidentiality:
- Not disclosing information
- Not using information for personal gain
What is meant by ‘Integrity’ in the Code of Ethics?
Integrity:
- Honest
- Fair
- Truthful
- Straightforward
What is meant by ‘Professional Behaviour’ in the Code of Ethics?
- Comply law/regulations
- Avoid actions discrediting the profession
- Courtesy and consideration
What is meant by ‘Objectivity’ in the Code of Ethics?
Objectivity:
- Being independent of mind
- Unbiased
What is meant by ‘Professional competence and due care’ in the Code of Ethics?
- Possess appropriate knowledge and skill exercise
- Exercise sound and independent judgement
- Act diligently (timely, carefully)
What are the five threats to the principles?
- Self-interest
- Self-review
- Familiarity
- Intimidation
- Advocacy
What are the professional/legislative/regulatory safeguards in place to protect the principles?
- Education/training and CPD
- Corporate governance standards
- External third party reviews (e.g. of reports made by accountant)
- Professional standards
- Disciplinaries
- Recruitment process
What are the work environment safeguards to prevent breaches of principles?
- Quality control/assurance procedures
- Internal codes of conduct
- Company policies
How do you ensure technical competence?
- Training and education requirements for admission to ICAEW
- Requirements for ongoing membership (continuing professional development (CPD)); and for public practice members (certificate, code of ethics)
- If practising in a reserved area - ICAEW has regulatory powers over members (eligibility, conduct, competence)
