Code of Ethics Flashcards
Who developed the code of ethics?
IESBA (International Ethics Standard Board of Accountants)
What is the distinguishing mark of being a CPA?
responsibility to the public
Code of Ethics only applies to CPA in Public Practice and CPA in Business. True or False?
False (all CPA)
Parts of Code of Ethics
4 Parts
- Part 1 - Compliance with Code, Fundamental Principles, and Conceptual Framework
- Part 2 - Professional Accountants in Business
- Part 3 - Professional Accountants in Public Practice
- Part 4 - International Independence Standards
4A - Independence for Audit & Reviews
4B - Independence for Assurance
Engagements
Part 1 - Compliance with Code, Fundamental
Principles, and Conceptual Framework
Conflict with law
- law prevails, comply with all other parts of the code
Part 1 - Compliance with Code, Fundamental
Principles, and Conceptual Framework
Fundamental Principles (COBID)
Confidentiality
- no disclosure unless required or authorized
- continues EVEN after the END of relationship with client
Objectivity
Professional Behavior
- comply with laws and regulations
- avoid actions that will discredit the profession
Integrity
- straightforward and honest
Professional Competence and Due Care
- 2 stages : Attainment & Maintenance
- Act diligently in applying standards
Part 1 - Compliance with Code, Fundamental
Principles, and Conceptual Framework
Threats to Independence (SISRAFI)
Self-Interest
- Financial or other interest
Self-Review
- Siya rin gumawa ng iaaudit
Advocacy
- Promote the client’s position
Familiarity
- Long or close relationship with client
- Too sympathetic
Intimidation
- Actual or perceived pressure
- Undue influence
Part 1 - Compliance with Code, Fundamental
Principles, and Conceptual Framework
Conceptual Framework (3-Step Approach)
- Identify threats
- Evaluate threats
- Address threats
1. Eliminate
2. Apply safeguards (reduce to acceptable level)
3. Decline or end (last resort)
Receiving gift from clients is prohibited. True or False?
- If the amount of gift is trivial, it is acceptable
Some Notes:
- second opinions
- fee
- custody of client asset
- second opinions → may be a threat
- can quote whatever fee deemed appropriate (should be not so low compared to others)
- don’t take custody of client asset, if permitted
1. separate from own asset
2. account for income
Independence of Minds vs Independence in Appreance
Independence of Mind (own perception)
- The state of mind that permits the expression of a conclusion without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity, and exercise objectivity and professional skepticism.
Independence in Appearance (public perception)
- The avoidance of facts and circumstances that are so significant that a reasonable and informed third party would be likely to conclude that a firm’s or an audit or assurance team member’s integrity, objectivity or professional skepticism has been compromised.
Financial Interest
- Direct
- Indirect
Direct
- Material → X
- Immaterial → X
Indirect
- Material → X
- Immaterial → ✓
Loans and Guarantees
- Bank
- Non Bank
Bank
- Material → X
- Immaterial → ✓
Non Bank
- Material → X
- Immaterial → ✓
Contingent and Outstanding Fees are allowed. True or False?
False
Advertising, Solicitation, and Referral Fee are allowed. True or False?
False
