Professional and Ethical Duty Of Accountant

Question 1

Ethical problems that can arise in preparing finance statements or advising on corporate reporting

Answer 1

• Professional Competence
- Key issue when making decisions about accounting treatment and disclosures
- Duty to keep up to date with developments and regulations
Circumstances that threaten this:
(1) Insufficient time
(2) Incomplete, restricted or inadequate information
(3) Insufficient experience, training or education
(4) Inadequate resources

• Objectivity and Integrity
Can be threatened by
(1) Financial interest; profit related bonus and share options
(2) Inducements to encourage unethical behaviour

• Pressure (externally or possibility of personal gain) to be associated with misleading info
Members should not be associated with reports, returns, communications when they believe info
(1) Contains a materially misleading statement
(2) Contains statements or info furnished recklessly
(3) Has been prepared with bias
(4) Omits or obscures information required where it will be misleading

Question 2

Fundamental principles most relevant in Corporate Reporting

Answer 2

• Objectivity
• Integrity
• Professional competence and due care
• Confidentiality
• Professional behaviour

Question 3

ACCA Framework of decisions (5 Questions)

Answer 3

(1) What is the real issue?
(2) Are there threats to compliance with the fundamental principles?
(3) Are the threats clearly significant?
(4) Are there safeguards that will eliminate the threats or reduce them to an acceptable level?
(5) Can you face yourself in the mirror?

Question 4

Role of Moral Philosophy and Theory in Ethics

Answer 4

- Do ethics change over time?
Ethical Relativism (yes) vs Absolutism (no)

• Kohlbergs individual ethical development
  (1) Punished if not act ethical
  (2) Should act ethically because law
  (3) Should act ethical as right thing todo regardless of consequences

Question 5

Influences on Ethics

Answer 5

• Individual Factors
Age and gender
National and cultural beliefs
Education and employment
Psychological factors
How much influence individuals believe they have
Personal integrity
Moral imagination (lvl of awareness of moral consequences of actions)

• Situational Factors
Issue related factors - nature of issue and how it will be viewed in organisation

Context related factors - expectation and demands placed on people working in an organisation

Question 6

Ethics in Organisation and approaches

Answer 6

Personal ethics (upbringing, beliefs, opinins, personality)
Professional ethics (ACCA)
Organisational culture
Organisational systems (formal codes)

Approaches

Compliance based approach
- Rules and Law
Integrity based

Question 7

Non Financial Reporting Standards

Answer 7

• Transparency
Demand for greater transparency, especially narrative on areas such as
- Trends and factors likely to affect company future development
- Environmental, HR, Social/Community issues
- Policies and their effectiveness

• Standards 
Types of issues now being reported
- Governance
- Management systems
- Impact data
- Target setting
- Policy statements
- Values statements 

However, varies in different places but moving to standardisation