ethics Flashcards
what are the five fundamental principles of ethics ?
integrity
objectivity
competence and due care
confidentiality
professional behaviour
what is the fundamental principle : ethics ?
honest, genuine and valid
what is the fundamental principle : objectivity ?
without bias, conflict of interest or undue influence
what is the fundamental principle : competence and due care ?
professional knowledge, competent
what is the fundamental principle : confidentiality ?
disclosure to third parties
what is the fundamental principle : professional behaviour ?
comply with laws and regulations, avoiding bringing profession into disrepute
what are the five threats to ethical principles ?
self-interest
familiarity
intimidation
self review
advocacy
what is the threat to principles : self-interest ?
financial or other interest influence decisions
what is the threat to principles : familiarity ?
close or family relationship influences actions
what is the threat to principles : intimidation ?
real or perceived threat affecting actions
what is the threat to principles : self review ?
involved in audit or review of own work
what is the threat to principles : advocacy ?
promotes opinion or position of a company they are involved in
what are safeguards used for ?
to prevent situations where people will go against the rules
what are the two categories of safeguards ?
created by the profession
created in the workplace
what are some examples of safeguards within the profession ?
professional standards (IAS, IFRS)
external review of work by third party (audit)
professional or regulatory monitoring and disciplinary procedures
education/training/CPD (CCAB, CIMA)
corporate governance regulations (companies act 2006, FRC)
what is the company law ?
companies act 2006
directors must state that financial records have been prepared in accordance with accounting standards - provide true and fair view
what are some international accounting standards ?
industry framework designed to standardise global financial statement presentation
to deter manipulation of accounting statements, helping to prevent fraud and window dressing
to allow for comparability of global data to present true and fair views of organisations to stakeholders
ethical framework
what are the roles of accounting bodies ?
ethical code of conduct based on principles
disciplinary body
bringing accounting profession into disrepute
acting in breach of the bodies rules and regulations
depending on severity, discipline range from a fine to suspension or to expulsion
what are internal safeguards ?
employer ethics and conduct programme
strong internal controls
policies and procedures enforced with clear disciplinary procedures
strong leadership focussing on the ethical behaviour of staff
what is conceptual framework ?
developed by international accounting standards board to outline concepts that should be used
defines key terms (assets, liabilities, equity, profit, income, expense)
benefits of conceptual framework ?
reduce levels of window dressing
helps prepare in situations not yet covered by standards
helps stakeholders understanding
what are the organisations involved ?
financial reporting council (FRC) : in charge of the standards
department for business (government) : in charge of the laws
what can a business do in case of suspicion ?
ensure safeguards
evaluate significance of threats to principles
resolve conflicts of interest
seek external/professional help
