Topic 2 - Ethics Flashcards
what are the five fundamental principals?
integrity
objectivity
confidentiality
professional behaviour
professional competence
What are the general safeguards?
consult ethics partner
EQR - engagement quality review. all listen company clients must have one
communicate with those charged with governance/ audit committee
What is a self interest threat?
occurs when a firm or member of the audit team has financial or other interests in the client and is reluctant to take actions which could adversely affect this interest.
what are the default safeguards of a self - interest threat?
free limits (part B , section 4, 4,23, 24,26,310
extended EQR
what is a self-review threat?
occurs when auditors review their own or colleagues work. may not want to highlight errors in these numbers.
what are the default safeguards of a self - review threat?
separate teams (without information barriers)
what is a management threat?
occurs when auditors take on the responsibility of management and are no longer seen as a separate third party scrutinising the business
what are the default safeguards of a management threat?
inform management that all work will be of a technical, mechanical and informative nature only
what is an advocacy threat?
occurs when auditors promote the viewpoint or position of a client
what are the default safeguards of an advocacy threat?
say no
what is a familiarity threat?
occurs when auditors are deterred from acting objectively by close personal relationships
what are the default safeguards of a familiarity threat?
rotate staff (part b section 3 partner rules)
what is an intimidation threat?
occurs when auditors are deterred from acting objectively by threats actual or perceived
what are the default safeguards of an intimidation threat?
explain you will not be intimidated
what is a conflict of interest threat?
occurs when the same audit firm audits two clients in the same industry or same supply chain.
