Code of Ethics. Audit - 1

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INTRODUCTION:

Code of ethics is a very important matter in each and every profession and in accountancy profession it is more vital. The accountancy profession has a contradictory image. On the one hand accountants are seen as pillars of a society, providing reliable information in there working lives and acting as a treasurer for different public authority institutions, NGOs, banks, educational institution or local organizations in their spare of time. Chartered Accountants are also seen as an independent justifier regarding the financial performance and activities of private and public organizations audited by them that enhance the confidence level of different decision makers. The other side of the coin is the image of aggressive tax schemes, financial scandals and money laundering. Code of ethics establishes the fundamental principles of professional ethics for professional accountants and provides a demonstrative guideline for applying those principles. Professional accountants are required to keep remember and apply this Code of ethics to identify threats to compliance with the fundamental principles, to evaluate their significance and, if such threats are other than clearly insignificant to apply safeguards to eliminate them or reduce them to an acceptable level such that compliance with the fundamental principles is not compromised.

WHAT ETHICS IS:

Normally ethics is set of beliefs and thoughts of a person about what is right and wrong. In other words ethics can be defined as a set of morale principles or values. Ethics, also known as moral philosophy is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice, etc.

WHY CODE OF ETHICS NEED:

The services provided by professional accountants have greater involvement with the public interest. Because it is necessary for governments, shareholders, trading partners, management and any other stakeholders, that the financial and other reports and information provided by accountants are reliable and can be used by others as they go about their daily lives. Accountants work creates major impacts in the national economy through capital market as well as revenue collection for public expenditures (taxes). There is a third party involvement in most of accountants work; therefore professional accountants should maintain independence, integrity, objectivity and compliance with other ethical issues.

CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS:

The International Federation of Accountants (IFAC) issued code of ethics under its own authority, high quality ethical standards and other pronouncements for professional accountants for use around the world. This Code of Ethics establishes ethical requirements for professional accountants. This code consists of: • Fundamental Principles; and

• Threats and Safeguards.

FUNDAMENTAL PRINCIPLES:

A professional accountant is required to comply with the following fundamental principles: • Integrity
• Objectivity
• Professional competence and due care
• Confidentiality
• Professional behavior

INTEGRITY:

A professional accountant should not allow bias, conflict of interest or undue influence of others to override professional or business judgments.

The principle of integrity imposes an obligation on all professional accountants to be straightforward and honest in professional and business relationships. Integrity also implies fair dealing and truthfulness.

A professional accountant should not be associated with reports, returns, Communications or other information where they believe that the information:

a) Contains a materially false or misleading statement;

b) Contains statements or information furnished recklessly; or

(c) Omits or obscures information required to be included where such omission or obscurity would be misleading.

OBJECTIVITY:
A...
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