ethics

Question 1

What are the main references for Ethics in auditing?

Answer 1

Auditing Fundamentals Chapters 2 & 3; SAICA Handbook 2024/2025 Vol 2B

Question 2

What roles can a professional accountant play?

Answer 2

Auditor, Director, Financial Manager, Shareholder, Other professional services

Question 3

What codes and laws apply to a Registered Auditor (RA)?

Answer 3

Code of Professional Conduct (Part 1 & 2), SAICA By-laws & Constitution

Question 4

What body regulates Registered Auditors in South Africa?

Answer 4

IRBA (Independent Regulatory Board for Auditors)

Question 5

What is the difference between SAICA and IRBA in the qualification path?

Answer 5

SAICA handles the CA(SA) process including board exams and ADP; IRBA registers and regulates auditors after qualification

Question 6

What are the main sections of the Auditing Profession Act relevant to Ethics?

Answer 6

Sections 22, 37, 38, 39, 41, 44, 45, 46

Question 7

What is the function of Section 22 of the APA?

Answer 7

Sets up the Committee for Auditing Standards under IRBA to develop, maintain, and issue auditing pronouncements

Question 8

What does Section 37 of the APA cover?

Answer 8

Registration of individuals as registered auditors

Question 9

List three requirements for registering as a Registered Auditor.

Answer 9

Must complete education & training, arrange for CPD, be a resident, be a fit and proper person

Question 10

Under what conditions can IRBA refuse registration of an auditor?

Answer 10

Misconduct, criminal convictions, insolvency, mental incapacity, false information, unfit person

Question 11

What does Section 38 of the APA regulate?

Answer 11

Registration of audit firms

Question 12

What is the requirement for a company to be registered as an audit firm?

Answer 12

All shareholders must be RAs; all directors must be shareholders and vice versa; MOI must state joint and several liability

Question 13

What does Section 39 of the APA cover?

Answer 13

Termination of registration of auditors

Question 14

What happens if a Registered Auditor becomes insolvent or commits misconduct after registration?

Answer 14

Their registration can be cancelled by IRBA

Question 15

What does Section 41 of the APA prohibit?

Answer 15

Non-RAs from holding out or pretending to be RAs, or from performing audits

Question 16

Who can use the title “Auditor”?

Answer 16

Only Registered Auditors (RAs); exceptions apply for honorary or internal auditors without fee

Question 17

Under what conditions must an RA disclose their identity in practice?

Answer 17

RA’s name must appear on letterheads and reports; firm or company must display responsible names

Question 18

Can an RA sign off on a report they did not supervise?

Answer 18

No. Work must be performed by the RA or under their supervision or that of their partners

Question 19

What does Section 44 of the APA regulate?

Answer 19

Duties of an RA in relation to an audit, including assigning responsibility and audit standards

Question 20

What must be true before an RA can express an opinion in an audit?

Answer 20

Audit must be unrestricted, assets/liabilities verified, records properly kept, reportable irregularities disclosed, laws followed

Question 21

Can a Registered Auditor conduct audits if there is a conflict of interest?

Answer 21

No. RAs may not conduct audits where conflicts of interest exist

Question 22

What is a Reportable Irregularity (RI) under Section 45?

Answer 22

An unlawful act or omission likely to cause financial loss or breach of duty, fraud, or theft by a responsible person

Question 23

To whom must a Reportable Irregularity be reported?

Answer 23

IRBA

Question 24

What types of liability can an auditor face?

Answer 24

Civil, Criminal, and Disciplinary

Question 25

What does Section 46 of the APA regulate?

Answer 25

Limitation of liability of auditors

Question 26

Under what conditions is an auditor liable for losses by third parties?

Answer 26

If the third party relied on a negligent opinion/report, suffered losses, and auditor knew or should have known this would happen

Question 27

Can an auditor reduce their liability via contract?

Answer 27

No. Liability may not be reduced or limited by agreement

Question 28

Who does the Rules of Improper Conduct apply to?

Answer 28

All IRBA-registered members and trainees

Question 29

What actions constitute improper conduct?

Answer 29

Law violations, dishonesty, audit pronouncement violations, tax evasion, false statements or records, refusal to resign or transfer records, noncompliance with IRBA

Question 30

Is failing to respond to IRBA requests considered improper conduct?

Answer 30

Yes, it is considered improper and unprofessional behavior

Question 31

What happens if a RA abandons their practice?

Answer 31

It is considered improper conduct under IRBA rules

Question 32

What is the purpose of the Rules of Improper Conduct?

Answer 32

To ensure ethical behavior, protect public interest, and maintain the reputation of the auditing profession

Question 33

How many Rules of Improper Conduct are there?

Answer 33

16 (Rules 2.1 – 2.16)

Question 34

What key areas are assessed in the Ethics exam?

Answer 34

Difference between RA and non-RA, audit vs other services, application of APA and Rules of Improper Conduct

Question 35

What should an RA do before practicing under a firm name?

Answer 35

Ensure all names are listed properly on all official documents as per Companies Act S171

Question 36

What services can an RA offer apart from audits?

Answer 36

Tax services, advisory services, financial management, internal audit, forensic services

Question 37

What must be in place before an RA performs an audit?

Answer 37

Sufficient risk management practices and adherence to auditing standards