Ethics and Audit Control/Assurance

Question 1

DECIDE FRAMEWORK

Answer 1

D=define the facts
E=ethical review
C=consider the options
I=investigate the outcomes
D=make a decision
E=evaluate results

Question 2

First D in decide

Answer 2

what are the facts
which issues demand a decision
(facts and stakeholders - who’s affected)

Question 3

First E in Decide

Answer 3

which ethical principles are relevant?

Question 4

C in decide

Answer 4

what are the most reasonable and practical choices?

Question 5

I in decide

Answer 5

given past experience, what are the likely ethical outcomes, costs, benefits of each choice?

Question 6

Second D in decide

Answer 6

what are your goals and objectives? how do you intend on achieving them

Question 7

Second E in decide

Answer 7

what criteria will you use to judge success? goals, ethical objectives

Question 8

CAANZ XRB code of ethics

Answer 8

integrity
objectivity
professional competence and due care
confidentiality
professional behavior
-independence- overarchning

Question 9

Integrity

Answer 9

members are obligated to be straightforward and honest in all professional and business relationships

Question 10

Objectivity

Answer 10

Judgement should not be compromised because of bias, conflict of interest, or influence of others

Question 11

Professional competence and due care

Answer 11

doing good job, not pressured to do something you dont have skills/mental space to do well
knowledge and skill
competence and diligence
follow right standards
carry out tasks in a timely manner

Question 12

Confidentiality

Answer 12

not sharing info you shouldnt, unless required by law

Question 13

Confidentiality - whistle blowing

Answer 13

reveals info to protect the public
risky because often they are doing something illegal by disclosing that information
Laws made to protect whistleblowers (if they can justify it based on the harm not revealing info could do) in contempoary democratic societies

Question 14

Confidentiality - insider trading

Answer 14

illegal
knowing certain inside information and sharing it shareholders to tell them to buy more/sell shares…….in return getting a cut of what they make
shareholders should all have same knowledge

Question 15

Professional behaviour

Answer 15

Not one person working for our own interest, part of a community of the profession
Comply with relevant laws and regulations
Avoid actions that may discredit the professional includes:
Courtesy and consideration in workplace
Being honest and truthful about services that you offer
Not making disparaging references about others and their work…

Question 16

Objectives internal control should help a company achieve

Answer 16

• Reliability and relevance of financial reporting - want it to be accurate
• Effectiveness and efficiency of operations - eg lecture doors limiting entrance outside lecture hours, job done, effective and efficient
• Compliance with applicable laws and regulations

Question 17

Elements of internal control

Answer 17

CRIME
C= Control
R = Risk Assessment
I = Information
M = Monitoring
E = Control Environment

Question 18

C in CRIME

Answer 18

Control Activity
procedure policy that governance put in place to help them achieve the objective of the company and minimise risk to an acceptable level.
- Activities they want to be doing
eg. separation of activity… people who handles money shouldn’t authorise payments

Question 19

R in CRIME

Answer 19

Risk Assessment
Identify, analyse (not all risk have the same impact, high risk, low risk etc), mitigate/manage to an acceptable level (cant elemiate risk)
Eg
Analyse impact of the risks to operations

Question 20

I in CRIME

Answer 20

Information & Communication
Relevant info should be identified captured and communicated to employees to help discharge responsibility assigned to them
Top to bottom management, bottom to top, employees/people anonymously reporting misbehaviour eg whistle blowing

Question 21

M in CRIME

Answer 21

Monitoring
Constant assessment of internal control.
Eg
Consistently monitoring physical access…. Door still work?
Internal auditing

Question 22

E in CRIME

Answer 22

Control Environment
Foundational to every other internal control component. Control activity, risk assessment, information, monitoring…..because control environment is the tone/culture set at the top (ethical culture, values of leadership). Strong values = strong risk assessment, control activities etc
People, culture at strategic top management
eg
Commitment to ethical values and integrity
Board oversight, audit committee oversight