Ethics

Question 1

Fundamental Principles

Answer 1

Integrity
Confidentiality
Professional Competence and due care
Objectivity
Professional behavior

Question 2

Integrity

Answer 2

Professional accountants should be straightforward and honest in all professional and business relationships. Integrity also implies fair dealings and truthfulness.

Question 3

Objectivity

Answer 3

Professional accountants should not allow bias, conflict of interest or the undue influence of others to override their professional or business judgement.

Question 4

Professional Competence and Due Care

Answer 4

Professional accountants should maintain professional knowledge and skill at the level required to ensure that a client receives competent professional services and to act diligently in accordance with applicable technical and professional standards.

Question 5

Confidentiality

Answer 5

Professional accountants should respect the confidentiality of information acquired as a result of professional and business relationships and therefore not to disclose any such information to third parties without proper authority, not use the information for personal advantage.

Question 6

Professional Behavior

Answer 6

Professional accountants should ensure they comply with relevant laws and regulations and should avoid any action that discredits the profession.

Question 7

5 Ethical Threats to Independence

Answer 7

Self-interest
Self-review
Advocacy
Familiarity
Intimidation

Question 8

Self-Interest Threat

Answer 8

Related to the risk that a financial or other interest in a client will inappropriately influence the professional accountant’s judgements or behaviors.

Question 9

Familiarity Threat

Answer 9

This arises where, due to a long close relationship with a client, the professional accountant could be too sympathetic or too accepting of their work.

Question 10

Self-Review Threat

Answer 10

This arises where a professional accountant from an audit firm performs work for the client and this work must later be reviewed by the same person or another professional accountant from the same firm in order to arrive at a judgment on the subject matter.

Question 11

Advocacy Threat

Answer 11

Relates to the risk that a professional accountant promotes a client’s position to the point that the professional accountant’s objectivity is compromised.

Question 12

Intimidation Threat

Answer 12

Relates to the risk that the professional accountant is deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the professional accountant.

Question 13

Conflict of Interest

Answer 13

•Between members’ and clients’ interests

• If members compete directly with a client, or have a joint venture or similar with a company that is in competition with the client. This may threaten the member’s objectivity.
• The rules state that members and firms should not accept or continue engagements in which there are, or are likely to be, significant conflicts of interest between members, firms and clients.

Question 14

Conflict of Interest

Answer 14

•Between the interests of different clients

• This situation frequently arises when the companies are in direct competition with each other, and particularly when the auditors have access to particularly sensitive information.
• Where acceptance or continuance of an engagement would, even with safeguards, materially prejudice the interests of any client, the appointment should not be accepted or continued.