Audit Final Outline
CHAPTER 19: PROFESSIONAL CONDUCT, INDEPENDENCE, AND QUALITY CONTROL
Ethics and Professional Conduct * Ethics- system or code of conduct based on moral duties and obligations that indicate how an individual should interact with others in society. * Professionalism- refers to the conduct, aims, or qualities that characterize or mark a profession or professional person. * Most important concepts: personal responsibility and integrity * Accounting profession has developed a Code of Professional Conduct that guides the behavior of accounting professionals.
Theories of Ethical Behavior * Some ethical choices difficult simply due to the temptation or pressure to pursue one’s self-interest. * Other choices are complicated by sheer difficulty of sorting out the issues and deciphering what might be appropriate or inappropriate actions to take. * 3 overlapping methods/theories of ethical behavior: * (1) Utilitarianism- the interests of all parties affected, not just one’s self-interest should be considered. * (2) Rights-based approach- individuals have certain rights and other individuals have a duty to respect those rights; should undertake actions only if it doesn’t violate the rights of any individual. * (3) Justice-based approach- concerned with issues such as equity, fairness and impartiality.
An Overview of Ethics and Professionalism in Public Accounting * SEC- has legal authority to oversee the public accounting profession; has allowed private-sector entities such as the FASB and the ASB to set accounting (FASB) and auditing (ASB) standards. * PCAOB- adopted professional standards established by the AICPA on an interim basis in 2003, including Code of Professional Conduct. Pg. 646
The AICPA Code of Professional Conduct: A Comprehensive Framework for Auditors * Consists of two sections: * Principles of Professional Conduct- setting forth ideal
Ethics and Professional Conduct * Ethics- system or code of conduct based on moral duties and obligations that indicate how an individual should interact with others in society. * Professionalism- refers to the conduct, aims, or qualities that characterize or mark a profession or professional person. * Most important concepts: personal responsibility and integrity * Accounting profession has developed a Code of Professional Conduct that guides the behavior of accounting professionals.
Theories of Ethical Behavior * Some ethical choices difficult simply due to the temptation or pressure to pursue one’s self-interest. * Other choices are complicated by sheer difficulty of sorting out the issues and deciphering what might be appropriate or inappropriate actions to take. * 3 overlapping methods/theories of ethical behavior: * (1) Utilitarianism- the interests of all parties affected, not just one’s self-interest should be considered. * (2) Rights-based approach- individuals have certain rights and other individuals have a duty to respect those rights; should undertake actions only if it doesn’t violate the rights of any individual. * (3) Justice-based approach- concerned with issues such as equity, fairness and impartiality.
An Overview of Ethics and Professionalism in Public Accounting * SEC- has legal authority to oversee the public accounting profession; has allowed private-sector entities such as the FASB and the ASB to set accounting (FASB) and auditing (ASB) standards. * PCAOB- adopted professional standards established by the AICPA on an interim basis in 2003, including Code of Professional Conduct. Pg. 646
The AICPA Code of Professional Conduct: A Comprehensive Framework for Auditors * Consists of two sections: * Principles of Professional Conduct- setting forth ideal