Ethical Considerations

Question 1

What are the 5 ethical principles?

Answer 1

Integrity- accountants must be straightforward and honest in professional settings

Objectivity- accountants arent allowed bias, conflict of interest

Professional competence and due care- accountants must maintain professional knowledge and skills

Confidentiality- they must not disclose any information obtained through their professional duties to third parties without permission .

Professional behaviour- accountants must comply with relevant laws and regulations

Question 2

What is the role and composition of the board of directors?

Answer 2

Executive directors- full time employees who are responsible for the day to day running of the company
Non-executive directors- part time employees, appointed to provide independent advice.

Directors must:
• act within their powers
• promote success of the company
• exercise independent judgement
• avoid conflict
And also
• make surefinancial statements are accurate
• they have been prepared with the international accounting standards
• appoint auditors to check statement

Question 3

What is the role of the auditor?

Answer 3

They make sure:
• financial statements are true and provide a fair view of the company
• they have been properly prepared
• the directors report is consistent with the contents of the statement

Question 4

How do you act ethically?

Answer 4

• apply the principles of ethical behaviour
• apply codes of practice of professional bodies
• identify and evaluate threats
• ensure safe guarding
• resolve conflicts of intrest
• seek external or professional help when necessary

Question 5

What are the threats to ethical behaviour?

Answer 5

Self-intrest - the threat of a financial other other type of interest influencing your judgement or behaviour. E.g. money

Self review- the threat of an accountant not appropriately checking past work to not take accountability for mistakes, could be for someone else

Advocacy- accountants promoting a client or employer where bias can be built or objectivity is compromised

Familiarity- relationships affecting judgement

Intimidation- actual or perceived pressures affecting objectivity

Question 6

How do you resolve conflicts of interest?

Answer 6

Identify relevant facts
Identify role and position
Identify ethical principles
Identify threats to principles
Follow procedures