Ethics in Accounting Flashcards

1
Q

What are accountants responsible for providing?

A
  • Accurate financial information
  • Ensuring the integrity of financial records
  • Complying with relevant laws and standards
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2
Q

How should ethical decisions be made?

A

With the aim of benefitting the majority without causing harm to others

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3
Q

What are the 5 fundamental principles of ethical accounting?

A
  • Integrity
  • Objectivity
  • Professional competence and due care
  • Confidentiality
  • Professional behaviour
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4
Q

What are the characteristics of professional competence and due care?

A
  • Acquire necessary knowledge and skills
  • Follow applicable technical and professional standards
  • Be able to adapt your skills to current developments in practice, legislation and techniques
  • Act in accordance with the work carefully and on a timely basis
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5
Q

What are the characteristics of professional behaviour?

A
  • Complying with relevant laws and regulations
  • Avoid actions that will give the job a bad reputation
  • Do not make exaggerated claims of your services, qualifications and techniques
  • Do not make bad comments about the work of others
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6
Q

What are the characteristics confidentiality?

A
  • Information from clients should not be shared with anyone, unless there is a legal or professional duty to do so
  • Confidential information should not be used as an advantage
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7
Q

What are the characteristics of integrity?

A
  • Do not be associated with false, misleading or recklessly provided statements
  • Do not omit or obscure information
  • Be straightforward and honest in all relationships
  • Avoid conflicts of interest
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8
Q

What are the characteristics of objectivity?

A
  • Ensure professional judgement is not compromised because of bias, conflict or undue influence
  • Do not carry out certain tasks if you know you cannot be objective
  • Communicate information fairly and give up any information that could influence a user’s understanding
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9
Q

What is the accruals concept?

A

Revenues and expenses should be recorded when they are earned or incurred, rather than when cash is received or paid

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10
Q

What is the consistency concept?

A

When an accounting method or policy is adopted, it should be applied consistently in future periods unless a change is justified

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11
Q

What is the going concern concept?

A

Financial statements are prepared under the assumption that the business will continue to operate in the foreseeable future

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12
Q

What is the prudence concept?

A

Revenues should not be anticipated, but expenses and losses should be recognised as soon as they are probable, so that the chance of overstating financial statements is less

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13
Q

What is the realisation concept?

A

Revenue should only recognised when it is earned

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14
Q

What is the materiality concept?

A

Financial statements should include all items that are tangible

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15
Q

What is the historical cost concept?

A

Assets should be recorded at their original purchase cost

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16
Q

What is the entity concept?

A

The financial affairs of the business are separate from the owner’s affairs

17
Q

What is the time period concept?

A

Financial statements are prepared for specific periods

18
Q

What is the substance over form concept?

A

The financial statements should show the economic reality over their legal form

19
Q

What are ethical threats?

A

Things that may influence an accountant to not report financial data properly

20
Q

What is the self interest threat?

A

When financial gain or self interest affects an accountant’s judgement, causing a conflict of interest

21
Q

What is the self review threat?

A

When an accountant is asked to revaluate their previous work, it may stop them from being objective

22
Q

What is the advocacy threat?

A

When an accountant promotes a certain opinion or position, which compromises their objectivity in the matter

23
Q

What is the familiarity threat?

A

When an accountant becomes sympathetic in the interest of their clients due to their close relationships, and may be more lenient when producing financial data

24
Q

What is the intimidation threat?

A

When an accountant is stopped from acting in the correct way due to real life threats