Chapter 14 - ethics

Question 1

1. What are the 3 sources of ethical guidance and who do they apply to?
2. What babis do all 3 work on?

Answer 1

1. IFAC → (main body) applies to all accountants internationally

• ICEAW → applies to all members, staff and trainees
• FRC → appliesto all UK auditors

2. Principles _{(not rules)} → encurage compliance and flexability to change

Question 2

1. What are the 5 fundermental ethical principles the IFAC code contains?

Answer 2

PIPCO

1. Professional behaviour
2. Integrity
3. Proffessional competence and due care → keeping knowledge up to date
4. Confidentiality
5. Objectivity → independent with a questionable mind

Question 3

What approach have the IFAC set out to retain intependant

Answer 3

If safeguarding is not available → eliminate activities causing threat or decline engagment

Question 4

What 6 threats to independance do the IFAC and ICEAW identify? (things that reduce a wuestioning mind)

Answer 4

1. Self interest → auditor reluctant to take interest due to personal gains or relationship
2. Self review → An auditor is put in a position where there are reviewing their own work
3. Familiarity → becoming too famailar with a project due to length of time spend on it or prior involment
4. Advocay → auditor taking managments side (not working with own mind set)
5. Intimidation → auditors conduct is conducted by fear (threats of court & no payment)

Question 5

What safeguarding is created by professionals / legilations under the IFAc code?

Answer 5

Question 6

What safeguarding is put in place in the work place under the IFAC code?

Answer 6

Question 7

What threats to indepence do FRC identify?

Answer 7

• All 5 the same as IFAC and ICEAW
• Managment → when an auditor becomes closely alligned with the views of the manager (we advise, we don’t tell)