Professional ethics and Quality Control procedures

Question 1

Fundamental principles of professional ethics

Answer 1

PIPCO
Professional behaviour
Integrity
Professional competence and due care
Confidentiality to client
Objectivity

Question 2

What are the circumstances when an expert may disclose information without obtaining client’s permission?

Answer 2

1. Obligatory disclosure:
   - by law
   - by court order
   - to regulators
2. Voluntary disclosure (prof. duty/right to disclose) - NOCLAR
   - to comply with qual. review
   - to respond to an enquiry/review by ACCA/other reg. body
   - to protect member’s interest
   - to comply with technical/prof. standards
   - where in public interest

Question 3

What is NOCLAR - non-compliance with laws and regulations?

Answer 3

Acts of omission or commission, intentional or unintentional, committed by the entity or by those charged with governance, which are contrary to the prevailing laws and regulations.

Question 4

Threats to fundamental principles

Answer 4

• Self interest
• Self-review
• advocacy
• familiarity
• intimidation

Question 5

What are the types of safeguards?

Answer 5

• Created by profession, regulation and legislation
• In the work environment
• Created by individuals

Question 6

What is the role of an engagement letter?

Answer 6

To document and confirm

• auditor’s acceptance of the appointment
• objective and scope of audit
• extent of auditor’s responsibilities to the client
• the form of any reports

Question 7

Content of the Engagement Letter

Answer 7

• Objective of the audit
• Management responsibility for the FS
• Scope of the audit
• Form of reports or other communication
• Inherent limitation of audit and IC => risk that some of material misstatement may remain
• Access to document records and information
• Arrangements for planning and performing audit
• Expectation for receiving a letter of representation
• Request for acknowledgement for receiving a letter of representation
• Basis of fees

Question 8

What are the 3 elements of ACCA’s conceptual framework approach to independence?

Answer 8

1. IDENTIFY threats to compliance with fundamental principles?
2. EVALUATE the significance of the threat identified?
3. Apply SAFEGUARDS, where necessary, to eliminate the threats or reduce them to an acceptable level.