Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Audit & Assurance > Ethics and Acceptance > Flashcards

Ethics and Acceptance Flashcards

1
Q

Why is there a need for professional ethics?

A

So that the practitioner behaves and is seen to behave.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Independence

A

the freedom from situations and relationships where objectivity is perceived to be impaired by a reasonable and informed third party.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Reasonable and informed third party kaun hain?

A

Someone who does not need to be an accountant but has relevant knowledge and experience to understand uska kaam.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Integrity

A

The professional accountant should be straightforward and honest.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Example of an auditor with integrity

A

If the auditor is aware of material misstatement in FS, would not issue an unmodified opinion.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Example of an accountant with integrity

A

Not signing off accounts that has misleading info (asked by CFO)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Objectivity

A

Accountant should be unbiased, not let conflict of interest or undue influence override judgements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Professional Competence and Due Care

A

Accountant must maintain professional knowledge and skill at the required level to ensure the clients/employers receive competent services based on current developments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Prof competence and due care as an auditor example dedo pls

A

Providing assurance ranging from reasonable to limited, based on SAE.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Confidentiality

A

Accountant must not disclose any company information without authority, to third parties or if any special authority, unless there is a legal requirement. Also not for any personal advantage to you or 3rd parties.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Confidentiality could be result of what?

A

Business or personal relationships

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Professional Behaviour

A

Comply with relevant laws and regulations of the standards as per IESBA. Also, avoid any conduct that could cause discredit to the profession..

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

At what level should the identified threats be for the non requirement of safeguards?

A

An acceptable level

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Self Interest Threat

A

May occur due to the financial or other interests of the accountant.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Examples of Self Interest Threat

A
  1. Additional fees from client
  2. Gifts and Hospitality
  3. Preferential rates over loans and OD facilities
  4. Overdue fees
  5. Business & Personal relationship
  6. Overdue fees
  7. Employment with clients
  8. Contingency fees
  9. Litigation with a client
  10. Own shares
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Self-Review Threat

A

Here the auditor reviews a judgement she has taken herself.
Or an audit firm prepared the financial statements and then acted as auditor.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Examples of Self Review Threat

A

1.Accounts prep
2. tax computation
3. Internal audit
4. Client staff joins the audit firm
5. Valuation/Non audit services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Advocacy

A

The accountant is expected to defend or justify the position of the client firm. Act as an ‘advocate’

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Examples of Advocacy

A

Representing, promoting or negotiating for the client.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Familiarity Threat

A

The auditor and the client have a too close business or personal relationship
(Long association coz you worked for them for many years)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is the significant risk in a familiarity threat?

A

Professional scepticism may not be sufficiently applied.

22
Q

Eg of Familiarity threat

A
  1. Long association
  2. Personal relationships
  3. Gifts and Hospitality
  4. Movement of staff between firm and client.
23
Q

Intimidation Threat

A

The auditor cannot act independently as she is scared by intimidatory threats

24
Q

Examples of Intimidation Threats

A
  1. We’ll find a new auditor if you issue an unfavorable audit opinion
  2. Fee dependency
  3. Accepting gifts
25
Q

Safeguards

A

Actions taken individually or in combination to eliminate threats to compliance with fundamental principles of ethics

26
Q

If fees from the client is settled below 15%, what is to be taken care of?

A

Check if pre-assurance review is a safeguard.

27
Q

Two situations where the auditor should make a voluntary disclosure?

A
  1. When disclosure is made to non-govt bodies
  2. When it is in the public interest to disclose.
28
Q

The action is only considered to be a safeguard if it is ___?

A

effective.

29
Q

Independence of mind

A
  1. Act with integrity
  2. Exercise prof scepticism & objectivity
  3. permits the expression of conclusion without any undue influence
    NOT:
    If it assures the ability and competence of person to carry the work.
30
Q

Audit fees should be calculated on the basis of what to ensure quality service is provided?

A

Time.

31
Q

Is it prohibited for audit firms to advertise as per code of ethics?

A

Absolutely not.

32
Q

Audit fees composition

A

15% of income and 10% for public interest entities

33
Q

If IFRS disagrees with framework, what should be followed?

A

IFRS

34
Q

Ethical problem with unpaid audit fees?

A

It is in effect with loan

35
Q

External audit may not use internal audit work for the basis of some conclusions?

A

Yes, true.

36
Q

If the advertising of audit firm states that they are better than other audit firms, then they are lacking what?

A

Integrity

37
Q

If an audit firm states that it is the most professional firm in the country, is that misleading?

A

Absolutely.

38
Q

On what basis should the audit fees be calculated?

A

The time needed to devote to an assignment to ensure a quality service was provided.

39
Q

Can a provision of non audit service such as tax planning be a threat to objectivity?

A

Yes

40
Q

Actual Litigation

A

When both the parties get into a big argument which needs to be settled by a third party (court)

41
Q

Threatened Litigation

A

One party threatens another regarding an issue or argument.

42
Q

Are contingent fees allowed?

A

Generally no, unless for non audit service clients.

43
Q

Can the audit firm provide non-audit services to listed and non listed clients?

A

For listed clients, no
for non-listed clients, yes, until and unless there are no root causes for threats.

44
Q

Safeguards for self review threat especially for non listed clients?

A

Bring in a professional in that field.

45
Q

If a listed company asks the audit firm for non audit services, what would we do?

A

Reject the offer. Resigning would be the last resort.

46
Q

Assisting in management decisions like recruitment is what kind of a threat?

A

Self interest threat and familiarity threat

47
Q

In the case of money laundering, how would it affect confidentiality?

A

If it’s a legal requirement to report money laundering, this overrides the principle of confidentiality.

48
Q

Can audit senior carry out the audit in the absence of the audit manager?

A

No.
Request for an audit manager with expertise.
Talk to management to extend deadline.

49
Q

Can the audit be checked one day prior to the audit clearance meeting?

A

No, it should be done done on a timely basis properly.

50
Q

Can there be changes to the plan?

A

Generally no, only when there is a requirement like risk is low and ask for an extended deadline and more time.

51
Q

Recruitment of NED by audit member?

A

No threats and no safeguards are required

52
Q

Cut off testing is not required for?

A

Potential valuation issues.

Audit & Assurance (18 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions