Ethics Flashcards
Define Ethics
A set of moral principles and values that guide behaviour.
What is a code of ethics?
A set of standards governing the conduct of members of a certain profession. E.g., the International Ethics Standards Board for Accountants (IESBA)
How should an accountant behave?
They must be trustworthy because public relies on them.
They should consider public interest and social responsibility.
What are the fundamental principles of the IESBA Code?
Confidentiality
Integrity
Professional behaviour
Objectivity
Professional competence and due care
What does CIPOP stand for?
Confidentiality
Integrity
Professional behaviour
Objectivity
Professional competence and due care
What is meant by confidentiality?
To respect the confidentiality of information acquired as a result of professional and business relationships - information should not be disclosed to third parties without client’s permission.
(Unless there is a legal right or professional duty to disclose).
What is meant by integrity?
To be straightforward and honest in all professional and business relationships.
What is meant by professional behaviour?
To comply with laws and regulations and to avoid any action which discredits the profession.
What is meant by objectivity?
To not compromise professional or business judgements because of bias, conflict of interest or undue influence of others.
What is meant by professional competence and due care?
To attain and maintain professional knowledge and skill, To act diligently and in accordance with applicable technical and professional standards when providing professional services.
Explain the IESBA Code’s conceptual framework
It is the methodology for dealing with ethical dilemmas. If an accountant thinks their compliance with any of the code’s fundamental principles is jeopardised they should:
. Identify the principle(s) in danger
. Identify the nature of the threat to the principle(s)
. Identify safeguards to reduce the threat(s) or eliminate them
altogether.
What are the five threats to compliance with the fundamental principles?
Self-interest threat
Self-review threat
Advocacy threat
Familiarity threat
Intimidation threat
Define Self-interest threat
When a firm or an individual has a financial or other interest in a client, resulting in a loss of objectivity e.g., having shares in a company you are auditing.
Define Self-review threat
When an auditor has to re-evaluate the work the firm has previously performed, meaning they will not be able to make an objective assessment e.g., both preparing and auditing financial statements.
Define Advocacy threat
When an auditor represents their client, promoting a position or opinion to the point that they are no longer objective e.g., meeting with potential investors.
