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XTAUDITP1 - Midterm > Code of Ethics > Flashcards

Code of Ethics Flashcards

1
Q

What is the distinctive feature of the accounting profession?

A

the acknowledgment of one’s public obligation

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2
Q

What is the first part of the Code of Ethics?

A

Complying with the Code, Fundamental Principles, and Conceptual Framework

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3
Q

Who are required to comply with the first part of the Code of Ethics?

A

All accountants

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4
Q

What are the fundamental principles of the Code of Ethics?

A
  1. Professional competence and due care
  2. Integrity
  3. Confidentiality
  4. Professional Behavior
  5. Objectivity
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5
Q

A professional accountant should comply with relevant laws and regulations and avoid any behavior that could discredit the profession. What fundamental principle is being described?

A

Professional behavior

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6
Q

When provisions in the law are different from or go beyond the Code of Ethics, unless forbidden by law or regulation, the professional accountant must _____________

A

must be aware of the distinctions and follow the more stringent regulations.

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7
Q

Safeguards should be applied when threats are identified, to mitigate thethreat. If the threat cannot be eliminated, the engagement should _________________.

A

not be continued.

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8
Q

The ____________ has the duty to identify those threats to compliance when there is a way to know such

A

practitioner

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9
Q

The practitioner should consider __________________ factors in identifying threats to compliance.

A

quantitative and qualitative

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10
Q

If the practitioner unknowingly violates the code, once the violation was made known to him or her, _____________

A

he/she/they shall correct it promptly.

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11
Q

Safeguards that may eliminate or reduce such threats to an acceptable level fall into two broad categories:

A

(a)Safeguards created by the profession, legislation or regulation; and (b)Safeguards in the work environment

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12
Q

Threats that may occur as a result of the financial or other interests of a professional accountant or of an immediate or close family member;

A

Self-interest threats

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13
Q

Threats which may occur when a previous judgment needs to be re-evaluated by the professional accountant responsible for that judgment;

A

Self-review threats

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14
Q

Threats which may occur when a professional accountant promotes a position or opinion to the point that subsequent objectivity may be compromised

A

Advocacy threats

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15
Q

Threats which may occur when, because of a close relationship, a professional accountant becomes too sympathetic to the interests of others;

A

Familiarity threats

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16
Q

Threat which may occur when a professional accountant may be deterred from acting objectively by threats, actual or perceived.

A

Intimidation

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17
Q

Such safeguards, which may be created by the accounting profession, legislation, regulation or an employing organization, include, but are not restricted to:

A
  1. Effective, well publicized complaints systems operated by the employing organization, the profession or a regulator, which enable colleagues, employers and members of the public to draw attention to unprofessional or unethical behavior.
  2. An explicitly stated duty to report breaches of ethical requirements.
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18
Q

When initiating either a formal or informal conflict resolution process, a professional accountant should consider the following, either individually or together with others, as part of the resolution process:

A

(a)Relevant facts;
(b)Ethical issues involved;
(c)Fundamental principles related to the matter in question;
(d)Established internal procedures; and
(e)Alternative courses of action.

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19
Q

Line of action when there is conflict:

A
  1. Proceed to those charged with governance or the audit committee 2. Gather advice from the relevant professional body or legal advisors
  2. If conflict cannot be resolved, withdraw from engagement
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20
Q

A fundamental principle that implies fair dealing and truthfulness.

A

integrity

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21
Q

A professional accountant should not be associated with reports, returns, communications or other information where they believe that the information:

A

(a) Contains a materially false or misleading statement;
(b) Contains statements or information furnished recklessly; or
(c) Omits or obscures information required to be included where such omission or obscurity would be misleading.

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22
Q

A professional accountant shall not perform a professional service if a circumstance or relationship biases or unduly influences the accountant’s professional judgment with respect to that service. What fundamental principle is being described?

A

Objectivity

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23
Q

This fundamental principle imposes the following obligations on professional accountants:
(a) To maintain professional knowledge and skill at the level required to ensure that clients or employers receive competent professional service; and
(b) To act diligently in accordance with applicable technical and professional standards when providing professional services.

A

Professional competence and due care

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24
Q

Competent professional service requires the exerciseof sound judgment in applying professional knowledge and skill in the performance of such service. Professional competence may be divided into two separate phases:

A

(a) Attainment of professional competence; and
(b) Maintenance of professional competence.

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25
Q

Competent professional service requires the exerciseof sound judgment in applying professional knowledge and skill in the performance of such service. Professional competence may be divided into two separate phases:

A

(a) Attainment of professional competence; and
(b) Maintenance of professional competence.

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26
Q

Professional competence is achieved by:

A

o College Education (BS Accountancy)
o Passing the board exams
o Continuing professional Development through trainings and seminars
o Work experience

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27
Q

The maintenance of professional competence requires __________________________________________.

A

a continuing awareness and an understanding of relevant technical professional and business developments.

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28
Q

____________ encompasses the responsibility to act in accordance with the requirements of an assignment, carefully, thoroughly and on a timely basis.

A

Diligence

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28
Q

____________ encompasses the responsibility to act in accordance with the requirements of an assignment, carefully, thoroughly and on a timely basis.

A

Diligence

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29
Q

This fundamental principle requires that a professional accountant should take steps to ensure that those working under the professional accountant’s authority in a professional capacity have appropriate training and supervision.

A

Professional competence and due care

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30
Q

What are the circumstances where a professional accountant is allowed to disclose confidential information?

A

(a) Disclosure is permitted by law and is authorized by the client or the employer;
(b) Disclosure is required by law, for example
(c) There is a professional duty or right to disclose, when not prohibited by law:

31
Q

This fundamental principle imposes an obligation on professional accountants to comply with relevant laws and regulations and avoid any action that may bring discredit to the profession

A

Professional Behavior

32
Q

In marketing and promoting themselves and their work, professional accountants should not bring the profession into disrepute. Professional accountants should be honest and truthful and should not:

A

(a) Make exaggerated claims for the services they are able to offer, the qualifications they possess, or experience they have gained; or
(b) Make disparaging references or unsubstantiated comparisons to the work of others.

33
Q

What type of threat is: A financial interest in a client or jointly holding a financial interest with a client.

A

Self-interest Threat

34
Q

What type of threat is:
Undue dependence on total fees from a client.

A

Self-interest threat

35
Q

What type of threat:
Having a close business relationship with a client.

A

Self-interest threat

36
Q

What type of threat:
Concern about the possibility of losing a client.

A

Self-interest threat

37
Q

What type of threat is:
Potential employment with a client.

A

Self-interest threat

38
Q

What type of threat:
Contingent fees relating to an assurance engagement

A

Self-interest threat

38
Q

What type of threat:
Contingent fees relating to an assurance engagement

A

Self-interest threat

39
Q

What type of threat is:
The discovery of a significant error during a re-evaluation of the work of the professional accountant in public practice.

A

Self-Review Threat

39
Q

What type of threat is:
The discovery of a significant error during a re-evaluation of the work of the professional accountant in public practice.

A

Self-Review Threat

40
Q

What type of threat:
Reportingon the operation of financial systems after being involved in their design or implementation.

A

Self-review threat

41
Q

What type of threat:
Having prepared the original data used to generate records that are the subject matter of the engagement.

A

Self-review threat

41
Q

What type of threat:
Having prepared the original data used to generate records that are the subject matter of the engagement.

A

Self-review threat

42
Q

What type of threat:
A member of the assurance team being, or having recently been, a director or officer of that client.

A

Self-review threat

43
Q

What type of threat:
A member of the assurance team being, or having recently been, employed by the client in a position to exert direct and significant influence over the subject matter of the engagement.

A

Self-review threat

44
Q

What type of threats:
Performing a service for a client that directly affects the subject matter of the assurance engagement.

A

Self-review threat

44
Q

What type of threats:
Performing a service for a client that directly affects the subject matter of the assurance engagement.

A

Self-review threat

45
Q

What type of threat:
Promoting shares in a listed entity when that entity is a financial statement audit client.

A

Advocacy

46
Q

What type of threat is:
Acting as an advocate on behalf of an assurance client in litigation or disputes with third parties.

A

Advocacy Threat

47
Q

What type of threat is:
A member of the engagement team having a close or immediate family relationship with a director or officer of the client.

A

Familiarity threats

48
Q

What type of threat is:
A member of the engagement team having a close or immediate family relationship with an employee of the client who is in a position to exert direct and significant influence over the subject matter of the engagement.

A

Familiarity Threats

48
Q

What type of threat is:
A member of the engagement team having a close or immediate family relationship with an employee of the client who is in a position to exert direct and significant influence over the subject matter of the engagement.

A

Familiarity Threats

49
Q

What type of threat is:
A former partner of the firm being a director or officer of the client or an employee in a position to exert direct and significant influence over the subject matter of the engagement.

A

Familiarity threats

49
Q

What type of threat is:
A former partner of the firm being a director or officer of the client or an employee in a position to exert direct and significant influence over the subject matter of the engagement.

A

Familiarity threats

50
Q

What type of threat is:
Accepting gifts or preferential treatment from a client, unless the value is clearly insignificant.

A

Familiarity threat

51
Q

What type of threat is:
Long association of senior personnel with the assurance client.

A

Familiarity threat

52
Q

What type of threat is:
Being threatened with dismissal or replacement in relation to a client engagement

A

Intimidation

53
Q

What type of threat is:
Being threatened with litigation.

A

Intimidation

54
Q

Being pressured to reduce inappropriately the extent of work performed in order to reduce fees.

A

Intimidation

55
Q

Acceptance decisions should be __________ reviewed for recurring client engagements.

A

periodically

56
Q

A professional accountant in public practice who is asked to replace another professional accountant in public practice, or who is considering tendering for an engagement currently held by another professional accountant in public practice, _______________________________________________________________________________________.

A

should determine whether there are any reasons, professional or other, for not accepting the engagement, such as circumstances that threaten compliance with the fundamental principles.

57
Q

An existing accountant is bound by confidentiality. The extent to which the professional accountant in public practice can and should discuss the affairs of a client with a proposed accountant will depend on the nature of the engagement and on:

A

o Whether the client’s permission to do so has been obtained; or
o The legal or ethical requirements relating to such communications and disclosure, which may vary by jurisdiction.

58
Q

Under Changes in a Professional Appointment, in the absence of specific instructions by the client, an existing accountant should ________________________________________.

A

not ordinarily volunteer information about the client’s affairs.

59
Q

When replying to requests to submit tenders, stating in the tender that, ___________________________________________ so that inquiries may be made as to whether there are any professional or other reasons why the appointment should not be accepted.

A

before accepting the engagement, contact with the existing accountant will be requested

60
Q

When asked to provide such an opinion (a second opinion) , a professional accountant in public practice should:

A
  1. evaluate the significance of the threats and, if they are other than clearly insignificant,
  2. safeguards should be considered and applied as necessary to eliminate them or reduce them to an acceptable level.
61
Q

If the company or entity seeking the opinion will not permit communication with the existing accountant, a professional accountant in public practice should __________________________________________.

A

consider whether, taking all the circumstances into account, it is appropriate to provide the opinion sought.

62
Q

When entering into negotiations regarding professional services, a professional accountant in public practice may ______________________________________________________.

A

quote whatever fee deemed to be appropriate.

63
Q

______________________ are widely used for certain types of non-assurance engagements. They may, however, give rise to threats to compliance with the fundamental principles in certain circumstances. They may give rise to aself-interest threat to objectivity

A

Contingency fees

64
Q

A professional accountant in public practice should not pay or receive a referral fee or commission, unless the professional accountant in public practice has established safeguards to eliminate the threats or reduce them to an acceptable level.

A
64
Q

A professional accountant in public practice should not pay or receive a referral fee or commission, unless the professional accountant in public practice has established safeguards to eliminate the threats or reduce them to an acceptable level. Such safeguards may include:

A
  1. Disclosing to the client any arrangements to pay a referral fee to another professional accountant for the work referred.
  2. Disclosing to the client any arrangements to receive a referral fee for referring the client to another professional accountant in public practice.
  3. Obtaining advance agreement from the client for commission arrangements in connection with the sale by a third party of goods or services to the client
65
Q

A professional accountant in public practice should not assume custody of client monies or other assets unless _________________________________________________

A

permitted to do so by law and, if so, in compliance with any additional legal duties imposed on a professional accountant in public practice holding such assets.

66
Q

To safeguard against such threats, a professional accountant in public practice entrusted with money (or other Assets) belonging to others should:

A
  1. Keep such assets separately from personal or firm assets; and
  2. Use such assets only for the purpose for which they are intended; and
  3. At all times, be ready to account for those assets, and any income, dividends or gain generated, to any persons entitled to such accounting; and
  4. Comply with all holding of and accounting for such assets.
67
Q

A professional accountant in public practice who provides an assurance service is required _____________________________________________.

A

required to be independent of the assurance client.

68
Q

What are the sections in the Part 2 of the Code of Ethics?

A
  1. Applying the Conceptual Framework - Professional Accountants in Business
  2. Conflicts of Interest
  3. Preparation and Presentation of Information
  4. Acting with Sufficient Expertise
  5. Financial Interests, Compensation and Incentives Linked to Financial Reporting and Decision Making
  6. Inducements, including gifts and hospitality
  7. Responding to Non-compliance with Laws and Regulations
    8, Pressure to Breach Fundamental Principles

XTAUDITP1 - Midterm (4 decks)

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