Code of Ethics for Professional Accountants

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Chapter 2
Professional Ethics and Conduct

Overview





Roles and duties of professional accountants
Ethical principles of auditors
Technical and ethical competence of auditors
Essential disciplinary measures for auditors

2

Concept of a profession
• Five attributes of a profession
– a systematic body of theory
– authority of professional bodies

– community sanction for control over
membership and accreditation
– ethical codes
– a professional culture

3

The duties, rights and values of a
professional accountant
• Duties to sustain a fiduciary (duty of care)
relationship
– behaviour that espouses responsible values
– continual attention to the requirements of clients
and other stakeholders

– acquire and maintain the required skills and
knowledge

• Overall, maintain a credible reputation for the
profession
4

The duties, rights and values of a
professional accountant cont ’
• Values required to carry out duties and maintain rights
include the following:







honesty
integrity
the exercise of due care
objectivity
confidentiality
competence

• The above assumes a commitment to put the public, the
client, the profession and the employer ahead of any selfinterest

5

An understanding of ethics
and ethical issues
• The word ‘ethics’ is derived from the Greek
word ethos, meaning ‘character’
• Whereas morality focuses on the ‘good’ and
‘bad’ of human behaviour, ethics focuses on
what is ‘right’ and ‘wrong’, and how and why
people act in a certain manner
• Focuses on a study of choices, standards and
behaviour
6

Professional Ethics and the
Accountant
• The nature of ethics
– Teleology
– Deontology
– Virtue ethics
– Ethical relativism

Ethical Decision Making –
AAA Model
1.

What are the facts of the case?

2.

What are the ethical issues in the case?

3.

What are the norms, principles and values related to the
case?

4.

What are the alternative courses of action?

5.

What is the best course of action that is consistent with
the norms, principles and values identified in step 3?

6.

What are the consequences of each possible course of
action?

7.

What is the decision?
8

Professional ethics and the
accountant
• Ethics are concerned with the evaluation of
choices where the options are not clear, or
where there is no absolute right or wrong
answer
• The study and practice of ethics are
important to enable an accountant to
examine critically a situation in which there
is a conflict of loyalties and interests
9

Code of Ethics for Professional
Accountants (APES 110)
• Issued June 2006 by the Accounting
Professional and Ethical Standards Board
(APESB)
• The board comprises people from the public
sector, corporate sector, small and medium
practices, the auditing profession, academia
and the public

10

Code of Ethics
• Principles-based. The fundamental principles
are:
– Public interest is overriding responsibility
– Integrity
– Objectivity
– Professional competence & due care
– Confidentiality
– Professional behaviour

• For each principle, a conceptual framework
identifies threats and safeguards
11

Categories of threats
• Self-interest threats, which may occur as a
result of the financial or other interests of a
member or of an immediate or close family
member
• Self-review threats, which may occur when a
previous judgment needs to be re-evaluated
by the member responsible for that
judgment
12

Categories of threats cont’
• Advocacy threats, which may occur when a Member
promotes a position or opinion to the point that
subsequent objectivity may be compromised
• Familiarity threats, which may occur when, because of a
close relationship, a Member becomes too sympathetic
to the interests of others
• Intimidation threats, which may occur when a member
may be deterred from acting objectively by threats,
actual or perceived

13...
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