Week 2 Flashcards
Rules of Professional Conduct
Independence Confidentiality Mtc of Reputation Integrity & Due Care Competence Adhere to Standards Advertising & Solicitation Other
Rules of Professional Conduct: Independence
Most critical characteristic
Unbiased viewpoint; serve public
Rules of Professional Conduct: Confidentiality
Need permission to disclose
Cannot profit from this information
Rules of Professional Conduct: Mtc of Reputation
You represent the profession
Give colleague opp. to explain actions
Rules of Professional Conduct: Integrity & Due Care
Open, honest and fair
Don’t take responsibilities lightly
Rules of Professional Conduct: Competence
Keep current – knowledge & skill
Match activities with skill set & knowledge
Rules of Professional Conduct: Adhere to Standards
Comply with GAAP & CAS
Rules of Professional Conduct: Advertising & Solicitation
Must be in good taste.
Cannot be false or misleading.
Rules of Professional Conduct: Other
Report breaches
No Contingent fees
Communicate with Predecessor Auditor
Independence – in mind & in appearance
Mind:
Objective Manner
No Benefit
Appearance:
Their confidence
What other’s See
The 5 Threats of Independence
Self-interest Self-review Advocacy Familiarity Intimidation
The 5 Threats of Independence
Self-interest
Interest in the financial condition or results of a client.
Ex. Own shares or substantial % of your revenue
The 5 Threats of Independence
Self-review
Can’t be objective when reviewing your own work.
Ex. Prepared the financial data being audited or designed the AIS
The 5 Threats of Independence
Advocacy
Perceived or actually is promoting the client’s position.
Ex. Assisting client with resolving major dispute with creditor
The 5 Threats of Independence
Familiarity
Difficult to behave with professional skepticism
Ex. Worked with client for 10 years or former co-worker is CFO
