Code of Ethics for Professional Accountants-2

7/30/2019 Code of Ethics for Professional Accountants-2

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Integrity should be straightforward and honest Objectivity should not allow bias, conflict of interest

or undue influence of others to override professional orbusiness judgments.

Confidentiality should not disclose any suchinformation to third parties without proper and specificauthority

Professional Competence and Due Care should actdiligently and in accordance with applicable technical

and professional standards Professional Behavior should comply with relevant

laws and regulations and should avoid any action thatdiscredits the profession


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The code provides a framework to assist a

professional accountant to identify, evaluate and

respond to threats to compliance with the

fundamental principles

Obligation to evaluate any threats to compliancewith the fundamental principles

Should take qualitative as well as quantitativefactors into account when considering the

significance of a threat


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Many threats fall into the following categories : Self-interest threats financial or other interest,

immediate or close family member

Self-review threats previous judgment needs tobe reevaluated

Advocacy threatspromotes a position or opinionto the point that subsequent objectivity may be

compromised Familiarity threats close relationship Intimidation threats by threats, actual and

perceived


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Safeguard that may eliminate or reduce such threats to anacceptable level fall into two broad categories:

Safeguard created by profession, legislation or

regulation, and Safeguard in the work environment

Safeguard created by the profession, legislation orregulation, include, but are not restricted to :

Requirements for entry into the profession Continuing professional development requirements Corporate governance regulations Professional standards


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Straightforward and honest

A professional accountants should not be associated

with reports, returns, communications or other that

the information : Contains a materially false or misleading statement

Contains statements or information furnishedrecklessly


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Impose an obligation on all professional accountants

not to compromise their professional or business

judgment because or bias, conflict of interest or the

undue influence of others


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An obligation on all professional accountants to refrain from : Disclosing outside the firm or employing organization confidential

information Using confidential information acquired as a result of professional

and business relationship to their personal advantage or theadvantage of third parties

Also : Maintain confidentiality of information disclosed by a prospective

client or employer Maintain confidentiality of information within the firm or

employing organization

Professional accountants are or may be required to discloseconfidential information : disclosure is permitted and or requiredby law


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Impose the following obligation on all professionalaccountants :

To maintain professional knowledge and skill at the levelrequired to ensure that clients or employers receive

competent professional service To act diligently in accordance with applicable technical

and professional standards when providing professionalservices

Professional competence may be divided into 2 separatephases :

Attainment of professional competence Maintenance of professional competence


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Examples of circumstances that may create self-

interest threats for a professional accountant in

public practice :

A financial interest in a client or jointly holding a

financial interest with a client Undue dependence on total fees from a client

Having a close business relationship with a client Concern about the possibility oflosing a client

Potential employment with a client


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Examples of circumstances that may create self-

review threats for a professional accountant in

public practice :

The discover of significance error during a re-evaluation of the work of the professionalaccountant in public practice

Reporting on the operation of financial systemsafter being involved in their design or

implementation


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Examples of circumstances that may create advocacy

threats for a professional accountant in public

practice :

Promoting shares in a listed entity when that entityis a financial statement audit client

Acting as an advocate on behalf on assurance client

in litigation or disputes with third parties


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Examples of circumstances that may create familiaritiesthreats for a professional accountant in public practice :

A former partner of the firm being a director or officerof the client or an employee in a position to exert direct

and significant influence over the subject matter of theengagement

A member of the engagement team having a close orimmediate family relationship with a director or officerof the client

A member of the engagement team having a close orimmediate family relationship with an employee of theclient who is in a position to exert direct and significantinfluence over the subject matter of the engagement


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Examples of circumstances that may create

intimidation threats for a professional accountant

in public practice :

Being threatened with dismissal or replacement inrelation to a client engagement

Being threatened with litigation

Being pressured to reduce inappropriately theextent of work performed in order to reduce fees


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Firm-wide safeguards in the work environment may include : Stresses the importance of compliance with the

fundamental principles Members of an assurance team will act in the public interest Policies and procedures to implement and monitor quality

control of engagement Advising partner and professional staff of those assurance

clients and related entities from which they must beindependent.

Engagement specific safeguards in the work environment mayinclude :

Involving an additional professional accountant to review thework done or otherwise advise if necessary


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Client Acceptance :

Should consider whether acceptance would create

any threats to compliance with the fundamental

principles Clients issues that, if known, could threatened

compliance with the fundamental principles, incl.

for example, client involvement in illegal activities

Acceptance decisions should be periodically

reviewed for recurring client engagements.


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Engagement Acceptance : Should agree to provide only those services that the professional

accountant in public practice is competent to perform Such safeguard may include :

Acquiring an appropriate understanding of the nature of theclients business

Acquiring knowledge of relevant industries or subject matters

Consider whether acceptance would create any threats tocompliance with the fundamental principles

Possessing or obtaining experience with relevant regulatory orreporting requirements

Complying with quality control policies and procedures Should consider factors such as reputation, expertise, resources

available and applicable professional and ethical standards.


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Changes in a Professional Appointment : Professional accountant who is asked to replace

another Professional accountant shoulddetermine whether any reasons for not acceptingthe engagement such as threats

The significance of the threats should be

evaluated, may require direct communication withthe existing accountant to established the facts

and circumstances behind the proposed changed An existing accountant is bound by confidentiality


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Should take a reasonable steps to identifycircumstances that could pose conflict of interest, forexample, Professional Accountant (PA) competesdirectly with a client or has a joint venture with a major

competitor of a client. Whether the PA has any business interest or

relationships with the client or a third party that couldgive rise to threats

Safeguard :

Notofying the client of the firms business interest oractivities that may represent a conflict of interest

Notifying is acting for two or more parties in respect of amatter where their respective interest are in conflict


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Situation where PA is asked to provide asecond opinion on on behalf of a theapplication of accounting, auditing, reporting

or other standards or principles company or anentity that is not an existing client may giverise to compliance with the fundamentalprinciples.

For example, a threat where the secondopinion is not based on the same set of facts orinadequate evidence.


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Quote a fee lower than another is not in itselfunethical if the fee quoted is so low that it maybe difficult to perform the engagement in

accordance with applicalble technical andprofessional standards for the price

May receive referral fee or comission relating to aclient, for example, a fee may be received for

referring a continuing client to another PA orother expert, may receive a comission from athirdparty (e.g.software vendor) in connection with thesale of goods or service to the client


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May be offered gifts and hospitality from client. Such anoffer ordinarily gives rise to threat to compliance withthe fundamental principles

The significance of the threats will depend on thenature, value and intent behind the offer. Where gifts orhospitality which a reasonable and informed third party,having knowledge of all relevant information, wouldconsider clearly insignificant are made a professional

accountant in public practice may conclude that theoffer is made in the normal course of business withoutthe specific intent to influence decision making or toobtain information.


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To safeguard against such threats, PA entrusted withmoney (or ather assets) belonging to others should : Keep such assets separately from personal or firm asset

Use such assets only for the purpose for which they areintended

At all times, be ready to account for these assets, and anyincome, dividends or gains generated

Comply with all relevant laws and regulations should be aware of threats to compliance with the

fundamental principles through association with suchassets, for example, if the assets were found to derivefrom illegal activities, such as money laundering


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Such safeguard may include :

Withdrawing from the engagement team

Supervisory procedures

Terminating the financial or business relationshipgiving rise to the threat

Discussing the issue with the higher levels of

management within the firm


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Thank you

Documents

Code of Ethics for Professional Accountants-2