Question

Assume that you are being interviewed by a company seeking an auditor. You wish to explain to the company why they should choose an auditor who is a professional accountant. Discuss each of the five ethical principles, indicating to the company how professional accountants who are audit specialists can be differentiated from other accountants who carry out audits, by:

(a) Explaining the meaning of each principle.

(b) Explaining why you consider each principle is important.

Answer 1

Answer : (a) Following are the five ethical principles:

Integrity.: A professional accountant should be straightforward and honest in all professional and business relationships

Objectivity : A professional accountant should not allow bias, conflict of interest or undue influence of others.

(b) Importance of each principle

Auditor deal with the intimate financial details of individuals and organizations. Some have the ability to execute million-dollar transactions, and others assist with safeguarding retirement funds of cab drivers and social workers.

Ethical codes are the fundamental principles that accounting professionals choose to abide by to enhance their profession, maintain public trust, and demonstrate honesty and fairness. People who join organizations and secure the credentials to present themselves to the public as CPAs or IIAs strive to protect the reputation of the profession.

Sadly, not everyone who works in the accounting field is trustworthy. Daily violations of public and private trust occur, and resolving ethical dilemmas doesn’t always end favorably. The following are five areas that deserve the attention of anyone considering working in the accounting profession.

Professional Competence and Due Care : A professional accountant has a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services based on current developments in practice, legislation and techniques. A professional accountant should act diligently and in accordance with applicable technical and professional standards when providing professional services.

Confidentiality : A professional accountant should respect the confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without proper and specific authority unless there is a legal or professional right or duty to disclose. Confidential information acquired as a result of professional and business relationships should not be used for the personal advantage of the professional accountant or third parties.

Professional Behavior : A professional accountant should comply with the relevant laws and regulations and should avoid any action that discredits the profession.