Question

Explain the ethical standards of auditing in the U.S. and why it is so important to have strong global standards also. Discuss the ethical guidelines you consider to be absolutely essential as part of International Auditing Standards.

Answer 1

Principles that when followed, promote values such as trust, good behavior, fairness, and/or kindness.
There is not one consistent set of standards that all companies follow, but each company has the right to develop the standards that are meaningful for their organization. Ethical standards are not always easily enforceable, as they are frequently vaguely defined and somewhat open to interpretation ("Men and women should be treated equally, " or "Treat the customer with respect and kindness."). Others can be more specific, such as "Do not share the customer's private information with anyone outside of the company."

The importance of global standards ACCA believes that global standards are important, not only for the accountancy profession, but for the world economy. 2011 is a big year in this respect and decisions made in the next few months could have major implications for many years to come. A sound financial reporting system, supported by high quality accounting and auditing standards and backed by a solid regulatory, governance and ethical framework, is a pre-requisite for economic development. Investors will not trust in financial information unless it has this underpinning and so economic activity and prosperity will not take place. they encourage transparency and easy comparison in transactions crossing borders and jurisdictions - translation and reconciliation costs are removed - all companies are better able to attract capital from a larger pool of investors, driving down costs of capital - opportunities for regulatory arbitrage are eliminated

As CPAs serving a global marketplace and a public interest that spans national borders, we should be engaged in the global process that drives the professional standards by which our conduct and that of our colleagues will be judged. There are many ways to do this, such as staying aware of standard-setting developments and attending public meetings, volunteering to serve on a committee or task force, and, finally, by providing thoughtful commentary on rule proposals.

The U.S. profession must continue its recent efforts to be involved in the global standard-setting process from beginning to end. The real opportunity for shaping future standards is during the research, eliberation and drafting phases, not after standards have been exposed for comment.

Professional accounting organizations, and particularly CPA associations and networks, need to employ their resources wisely to become part of a process that has significant ramifications for their practices and the practices of their constituents.

If you were traveling on business to Mexico City for the first time, you'd be wise to research the local currency, laws and business etiquette. Similarly, if your audit client operates a major subsidiary in Mexico and your audit report will be relied upon by users of the client's financial statements in Mexico, you need a working knowledge of international professional standards. You should know about the accounting, auditing, ethics and quality control standards that affect the engagement and your accounting practice.

While all of these professional standards are critically important, this article focuses on the international ethics standards including auditor independence promulgated by the International Federation of Accountants (IFAC) and how U.S. practitioners may be affected by them. (Co-author Robert Bunting is deputy president of IFAC.) The visibility of the IFAC Code of Ethics for Professional Accountants in the U.S. has grown in recent years as business has become increasingly global and as the AICPA has begun the process of converging its Code of Professional Conduct with the IFAC guidance. If you think global ethics rules are irrelevant for your practice, you may be surprised to learn that CPA firms of all sizes are being asked to confirm their compliance with global standards.