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Professional ethics and Code of conduct for accountants

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					Professional Ethics
Code of Professional conduct for
    accountants continued
       Fundamental principles

   Integrity – straightforward and honest in professional dealings

   Objectivity –independence

   Confidentiality- refrain from disclosing confidential information,

   Professional Competence and due care – maintain professional
    knowledge and skills

   Professional behaviour- comply with relevant laws and
    regulations. Honest and truthful in marketing and promoting
    themselves
Identifying the threats to compliance with the fundamental principles

   The majority of threats fall into the following
    categories:
       Self Interest threats- generally as a result of the
        financial or other interests of a professional
        accountant or of an immediate or close family
        member
       Self review threats – re-evaluation of a previous
        judgement
       Advocacy threats- promotion of a position or opinion
        to the point that subsequent objectivity may be
        compromised
       Familiarity threats – as a result of a close relationship
        one may become to sympathetic to the interest of
        others
       Intimidation threats-objectivity affected by actual or
        perceived threats
               Self interest threats
   Examples of self interest threats for accountants in
    public practice
       A financial interest in a client
       Jointly holding a financial interest with a client
       Undue dependence of fees from a client
       Close relationship with client
       Concerns about losing a client
       Potential employment with a client
       Contingent fees relating to an assurance engagement
   Examples of self interest threats for accountants in
    business
       Financial interests, loans or guarantees
       Incentive compensation arrangements
       Inappropriate personal use of corporate assets
       Concern over employment security
       Commercial pressure for outside the employing organisation
               Self review threats
   Examples of self review threats for accountants
    in public practice
       Discovery of significant error during a re-evaluation of
        the work of a member in public practice
       Reporting on the operation of financial systems after
        being involved in their design or implementation
       A member of the assurance team, being or recently
        been a director or officer of the client
   Examples of self review threats for accountants
    in business
       Business decisions or data being subject to review
        and justification by the same member in business that
        was responsible for making the decision or preparing
        the data
             Advocacy threats
 Examplesof advocacy threats for
 accountants in public practice
     Promoting shares in a listed entity when that
      entity is a financial statement audit client
 Examplesof advocacy threats for
 accountants in business
     Promotion of the organisations position
      should not present a threat provided the
      statements are not false nor misleading
                  Familiarity threats
   Examples of familiarity threats for accountants in public
    practice
       A member if the engagement team have a close or immediate
        family relationship with a director or officer of the client
       A member of the engagement team having a close or immediate
        family relationship with an employee of the client who is I a
        position to exert direct & significant influence over the subject
        matter of the engagement
       Accepting gifts or preferential treatment from a client, unless
        value is clearly insignificant
   Examples of familiarity threats for accountants in
    business
       member in business in a position to influence financial or non
        financial reporting issues because of their relationship with
        someone in a position to benefit from that influence
       Long association with business contacts influencing business
        decision
       Accepting gifts or preferential treatment unless value is clearly
        insignificant
           Intimidation threats
 Examplesof intimidation threats for
 accountants in public practice
     Threats of dismissal or replacement in relation
      to a client engagement
     Threats of litigation
     Pressure to reduce inappropriately the extent
      of work performed in order to reduce fees
 Examplesof intimidation threats for
 accountants in business
     Threats of dismissal or replacement over
      disagreement about application of an
      accounting principle or standard
     Implementation of safeguards to
             reduce threat
1.       Safeguards created by the profession, legislation or regulation;
           Education, training and experience requirements for entry into the
            profession
           Continuing professional development requirements
           Corporate governance regulations
           Professional standards
           Professional or regulatory monitoring and diciplinary procedures
           External review by a legally empowered 3rd party of the reports,
            returns, communications or information produced by a professional
            accountant
2.       Safeguards in the workplace
           Effective well publicised compliants systems which enables
            collegues, employers and members of the public to draw attention to
            unprofessional or unethical behavior
           Explicitly stated duty to report breaches of ethical requirements
 Case Study 1 Arthur Anderson
1.   Describe the culture of Arthur Andserson &
     how it may have contributed to its downfall?
2.   How does the provision of non auditing
     services to an audit client compromise the
     auditors independence?
3.   Why is it important for accounting firms to
     maintain their independence in fact and
     appearance?
4.   How did Arthur Anderson violate the public
     interest principle?

				
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