Ethical decision models

Question 1

Duties - external audit provisions

Answer 1

• compliance with legislation
• truth and fairness of accounts

Question 2

rights - external audit provisions

Answer 2

• access to records
• information and explanations
• attendance at meetings
• right to be heard at general meetings
• right to receive proposed written resolutions

Question 3

AAA model

Answer 3

1. document the facts
2. identify critical issues
3. norms, principles
4. identify alternatives
5. best vs step 3
6. consequences of each
7. decision

Question 4

Trucker model

Answer 4

1. Profitable?
2. Legal?
3. Fair?
4. Right?
5. Sustainable?

Question 5

IFAC’s code of ethics

Answer 5

‘a distinguish mark of the accountancy profession is its acceptance of the responsibility to act in the public interest.’

Question 6

fundamental ethical principles

Answer 6

1. integrity
2. objectivity
3. professional competence
4. professional behaviour
5. confidentiality

Question 7

threats to ethical principles

Answer 7

• self interest
• familiarity
• advocacy
• intimidation
• management - self review

Question 8

professional scepticism (ACCA)

Answer 8

an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error and a critical assessment of audit evidence

Question 9

why is professional scepticism important

Answer 9

• for value estimates
• impairment provision estimates
• disclosure on areas where there are diversities of approach in practice

Question 10

uk approach to ensure auditor independence

Answer 10

• self regulation by professional bodies or firms
• FRC audit quality review body
• Corporate governance principles and the role of the audit committee