Professional Ethics

Question 1

What are the conceptual framework approach to professional ethics

Answer 1

It recognises that there are:

Fundamental principles to be followed

These are subject to threats

Threats must be addressed

Question 2

What should order system if threats are in existence

Answer 2

Eliminate the circumstances that create the threats

Apply safeguards were available to reduce the threats to acceptable level

Decline and the specific professional activity

Question 3

How does the code of ethics consider “fees” within self interest threats

Answer 3

Contingent fees are not permitted for all the engagements

Relative size-the only benchmark in the code is 15% of total fees for two consecutive years for a PIE clients

Lowballing-quoting a lower fee is not in a cell unethical must not be so low that threatens professional competence and you care

Overdue fees may be seen as equivalent to a loan

Question 4

What are the fundamental principles

Answer 4

Confidentiality
Competence (professional)
Objectivity
Behaviour (professional behaviour)
Integrity

Question 5

What is advocacy threat

Answer 5

Where the assurance audit firm promote a point of view or opinion to extend the subsequent objectivity is compromised

Question 6

What is the time on period for familiarity threats

Answer 6

Engagement partner cannot serve clients for more than seven years is the time in period

Question 7

What is the cooling off period for an engagement partner within familiarity threat

Answer 7

The cooling off period is five consecutive years

Question 8

What is the definition of safeguard

Answer 8

Actions individually or in combination taken by the professional accountant that effectively eliminates threats to compliance with the fundamental principles or reduce them to acceptable level

Question 9

What is the test to determine if something is an acceptable level

Answer 9

Whether a reasonable and well-informed party would be likely to conclude that compliance with the fundamental principles is not compromised

Question 10

What are some examples of safeguards

Answer 10

Separate engagement teams (e.g. for corporation tax and VAT)

Not including or removing a member of the audit team

Review of audit work by professional who is not a member of the audit team

Discussion of ethical issues with those charged with governance or the audit committee

Disclosures of fees to those charge of governance or the committee

Rotating senior members of the audit team