CPC- FRAME-WORK( ETHICAL THREATS) JAN ITC Flashcards
Structure
{1}
Parts applicable to the person
Roles and Responsibilities
King iv principle 7 we even assess number of holdings the Chair has p7:35
CPC
2 The aforementioned matter creates a self-interest threat to
professional competence and due care since;
explanation-
not be able to perform both parties’ work with the
necessary diligence and dedication as she might not be
able to execute her responsibilities at CAI and DentOut
with due care and would have the necessary time to
perform all her duties with the care needed.
Preparation of annual F.S
Non-Compliance to IFRS = s29 Co-act 1 Section 29 of the Companies Act as the financial statements of
DentOut are not in compliance with the chosen accounting
framework
Links with s76 =
2 Section 76 of the Companies Act since she did not adhere to IFRS
16 requirements thus not performing her functions as director with
the degree of care, skill and diligence expected or is acting in her
own best interest.
3 This could create a self-interest threat to Michaela’s Integrity/
professional competence and due care / Objectivity because
4 Integrity as she was dishonest in pretending that the financial
statements were prepared based on IFRS whilst they were not;
Professional competence and due care as she was not acting
diligently and in accordance with the applicable technical and
professional standards being the IFRSs.
Objectivity due to possible bias towards preparing own AFS
especially since Michaela has financial interest (significant)
financial stake) in DentOut and might use her position as an
opportunity to further her own interests.
Income Taxes
aggressively attempts to keep the tax liability low
2 there is a self-interest threat to integrity since
* She might get involved in tax evasion, thereby contravening
laws as Michaela might be dishonest in declaring the
company’s income and claiming the company’s expenses
to keep the tax liability low
Conflict of Interest
-Dual Roles
-Personal Relationships:
-Financial Gain
a self-interest /Self-review threat to his
independence/objectivity
explanation:
the audit team at CAI for the audit of DentOut would be
biased sinceshe is an audit manager and directly involved
in the maintenance of financial records and preparation of
the financial statements of DentOut.
Reward for recommending CIA
The reward creates a self-interest threat to integrity/
objectivity since
she was not transparent in relation to being well rewarded
if CAI is awarded the audit
Use of Substandard Parts
a self-interest threat to her Integrity
apply why you saying that
some acts to spice things up
Customer Protection Act
Based on the above, Michaela might compromise professional behaviour
it would cause harm to the reputation of the profession if her
dishonesty, negligence in applying IFRS, breach of confidentiality and
non-compliance with the Companies Act become known.
