Unit 3 Summary.docx - Unit 3 Summary Pre-engagement activities Auditor Independence IESBA code o IESBA issues IESBA code sets out ethics requirement for

Unit 3 Summary.docx - Unit 3 Summary Pre-engagement...

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Unit 3 Summary Pre-engagement activities Auditor Independence IESBA code o IESBA issues IESBA code sets out ethics requirement for professional accountants, structured in three parts Part A – general application of the IESBA code Part B – Professional accountants in public practice Part C – Professional accountants in business practice Part A establishes the fundamental principles and provides a conceptual framework that can be applied to Identify threats with the fundamental principles Evaluate the significance of the threats identified and Apply safeguards when necessary to eliminate threats or reduce them to an acceptable level, safeguards are necessary when the professional accountant determines that the threats are not at a level at which a reasonable and informed third party would be likely to conclude, weighing all the specific facts and circumstances available to the professional accountant at that time, that compliance with the fundamental principles is not compromised A professional accountant shall use professional judgement in applying this conceptual framework IESBA code para 100.2 Part B and C describe how conceptual framework applies in specific circumstances, they provide examples of safeguards that may appropriately address threats to compliance with the fundamental principles, where no safeguard the threat must be avoided altogether Accountants expected to be guided not merely by words but also by spirit of IESBA code, using the conceptual framework para 100.6-100.11 This section focuses on Part A and S 290 of Part B Fundamental principles o IESBA five fundamental principles in para 100.5 IESBA Code – fundamental principles Paragraph Principle Definition 100.5(a) Integrity To be straightforward and honest in all professional and business relationships 100.5(b) Objectivity To not allow bias, conflict of interest or undue influence of others to override professional or business judgments 100.5(c) Professional competence and due care 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 and act diligently and in accordance with applicable technical and professional standards 100.5(d) Confidentiality To respect the confidentiality of information acquired as a result of professional and
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business relationships and, therefore, 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, nor use the information for the personal advantage of the professional accountant or third parties 100.5(e) Professional behaviour To comply with relevant laws and regulations and avoid any action that discredits the profession Each of these principles is discusses in more detail in the IESBA cose ss110-150 Threats and safeguards, IESBA code para 100.12 identifies the following threats to its fundamental principles
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