MODULE 11

Question 1

What are the 5 Fundamental principles the ICAS Code of Ethics that each professional accountant should observe?

Answer 1

1. Integrity
2. Objectivity
3. Professional competence and due care
4. Confidentiality
5. Professional Behaviour

Question 2

What are the main threats to an Auditors Independence?

Answer 2

1. Self-Interest - When auditors have financial or other interests which may cause them reluctant to make certain decisions-e.g Has an Investment in the client
2. Self Review -
3. Management - When the Audit firm has to make decisions which management should be making which can result in objectivity and independence becoming aligned with the directors
4. Advocacy - When the Audit firm acts as an advocate for an audited entity e.g When the audit firm acts on the clients behalf yo negotiate a tax reduction
5. Familiarity - a close personnel relationship with the client which can affect decision making e.g having a family member work for the audited entity
6. Intimidation- When the auditor is influenced by fear

Question 3

What are the 6 sections of the Ethical standards by the FRC?

Answer 3

Section 1:
Section 2: Financially, business and personal relationships
Section 3: Long association with engagements with entities relevant to engagements
Section 4: Fees, remuneration and even;