Question

Define ethics from the view point of audit firm? Why is it important for the audit firm?

Answer 1

• The Code of ethics govern the principles and the behavior of people working in an organization during internal auditing.
• It describes the minimum guidelines of code of conduct and behavioral expectations rather than specific tasks.
• Audit may benefit and is conducted properly when there is an increased level of ethical conduct and behavior of an organization where audit is being done.
• Hence, ethical behavior may restore trust and confidence in the capital market and reduce financial reporting fraud and errors.
• The five code of ethics are: Integrity, Objectivity, Professional Competence, Confidentiality and Professional behavior.
• Hence, ethics is very important for the audit firm as it helps in proper functioning of the audit.
• Audit firms are responsible for the ethical duties in respect to the observance of the accounting rules and standards that serve to make audits useful to their clients.
• The adequate resources and training, a culture that supports auditor integrity, and the subordination of maximizing profit to the maintenance of auditing standards are among the main responsibilities of auditing firms.