Ethics Flashcards
Integrity
To be straightforward and honest in all professional and business relationships
Steps to take when when evidence of money laundering is found
- Report to firm’s Money Laundering Reporting Officer
- Without tipping off
- Maintain confidentiality and record in documentation
- There is suspected money laundering
- Appears to be disguising/transferring proceeds
- No de minimis where money laundering concerned.
Objectivity
Not to compromise professional or business judgements because of bias, conflict of interest or undue influence of others.
Professional competence and due care
Attain and maintain professional knowledge and skill at the level required to ensure that a client or employing organisation receives competent professional service, based on current technical and professional standards and relevant legislation and act diligently and in accordance with applicable technical and professional standards
Confidentiality
Respect the confidentiality of information acquired as a result of professional and business relationships
Professional Behaviour
To comply with relevant laws and regulations and avoid any conduct that the professional accountant knows or should know might discredit the profession
Safeguards against threats
- Training
- ICAEW helpline
- Planning, supervision and review procedures
- Regulatory inspections
How does the FRC recommend ethical standard procedures should be implemented?
- Control environment at a firm should ensure professional approach toward ethical issues
- Segregation of duties between those engaged on audits and provision of non audit services
- Rotation of engagement partners and staff
- Procedures for evaluating the integrity of potential new clients
- Staff recruitment procedures
- Independence declarations of partners and staff
- Staff training, development and performance appraisal
- Monitoring and evidencing the firm’s own systems.
FRC Ethical Standard Section 4- What are the audit fee thresholds?
- 15% for unlisted clients
- 10% for listed clients
- If this limit is being approached, it needs to be disclosed to the client and the ethics partner.
FRC Ethical Standard Section 2, what are the guidelines for moving staff between firm and client?
- Safeguards should be in place if staff move between the audit firm and its audit client
- There should be no financial interest between the firm and client
FRC Ethical Standard 3, when should partners be rotated?
- Partners should be rotated if they have acted for the same client for 10 years
- For PIEs, this is 5 years.
FRC Ethical Standard Section 5
List of items that can be provided to a PIE audit client:
- Reporting on internal financial controls when required by law or regulation
- Reports required by authorities supervising the audited entity
- Reviews of interim financial information
- Reporting on government grants
When are business relationships permitted?
- In the ordinary course of business
- On an arm’s length basis, i.e. at market rate
- Not material to either party
How can non-compliance with laws and regulations affect the financial statements?
- There could be fines for non-compliance with regulations
- Provisions/Contingent Liabilities may be needed if there are legal claims
- There are going concern issues if authorities close factory/suspend licence.
