Question

In: Accounting

QUESTION TWO The code of professional ethics was anchored upon fundamental principles and general safeguards and...

QUESTION TWO

The code of professional ethics was anchored upon fundamental principles and general safeguards and these were introduced so that accounting and auditing practitioners and professionals apply the spirit of the code to every day practice. The framework and principles would be of little use if they could not be enforced. In this regard, all Professional bodies including ACCA therefore reserve the right to discipline its members who infringe the rules through a process of disciplinary hearings which can result if found wanting in either one either being; fined, suspended or indeed their membership withdrawn.

Required:

  1. Identify and describe the five (5) fundamental principles of audit professionals
  2. Identify and describe the three (3) general safeguards of the profession

Solutions

Expert Solution

Five fundamental principles in Auditing Code of Ethics and Conduct are:-

1) Integrity:- A professional accontant needs to be straightforward and honest in all his/her professional and business relationships.Integrity implie truthfulness. They should not be knowingly associated with any statement, information, or report that is false, misleading or any omission which leads to misleading.

2) Objectivity:- It is imperative for a professional accountant to comply with the principles of objectivity, which essentially requires on his/her part to not compromise and business decision or judgement because of any conflict, any bias or any other undue influence. He/she should not take the business activity if his his.her decisions are being influenced in any way regarding that activity.

3)Professional Competetnce and due care:- A professional accountant should attain and maintain professional knowledge as well as skill at that level that is required to ensure that a client or employing organisation/ third party receives competent professional service, based on current technical and professional standards and relevant legislation, as well as they should act according to the technical and professional standards of accounting.

4) Confidentiality:- Professional Members must maintain the confidentiality of information acquired as a result of professional and business relationships and must not disclose any such information to anyone without authority or unless there is a legal or professional duty to disclose. Confidential information acquired as a result of professional and business relationships must not be used for the personal advantage of any members or any third parties.

5) Professional Behaviour- A professional accountant must comply and respect the laws and regulations. And they must avoid any action or any decision that in any way might disrespect or negatively affect the reputation of the profession.

Safeguards created by the profession and legislation includes:-

  • Educational, training and experience requirements for entry into the profession.
  • Continuing education requirements.
  • Corporate governance regulations.
  • Professional standards and monitoring and disciplinary processes.
  • Active monitoring system of a firm's quality control system.

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