practice 4.docx - Ethical threat compliance with the...

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Ethical threat - compliance with the fundamental principle of professional ethics that potentially be threatened by a broad range of circumstances Self-interest threat - auditors could benefit from a financial or others interest in an audit client Self review threat - auditor put himself in a position of reviewing the subject that previously responsible Advocacy threat - auditor promote or may be perceived to promote, an audit client’s position and opinion to the point that subsequent objectivity is compromised Family threat - it occurs when by virtual of a close relationship with the audit client, officers and employees - auditor may become too sympathetic to the audit client’s interest Intimidation threat - it occurs when the auditor may be threatening by the audit client - an act frightens and threaten someone in order to persuade them to do something that you want them to do Fundamental principle of ethic Integrity - members shall be honest, straightforward, truthfulness and have strong moral principle in all professional and business relationship Objectivity - fair and unbiased - members shall not bias, conflict of interest or undue influence of others to override the professional and business judgement Professional competence and due care - members have a continuing duty to maintain professional knowledge and skill at the level require to ensure that a client and employer receive competent professional services based on current development in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standards Confidentiality - member shall respect the confidentiality of information acquires as a result of professional and business relationship Professional behavior - members shall comply with the relevant laws and regulation
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Duties of directors - to ensure proper accounting records are kept - to protect company’s assets - to adopt good company policies Right of external auditor - access to records - sufficient information and explanation - attendance at general meeting - right to speak at general meeting - right to receive written resolution Internal Control Advantage of internal control - to maximize profit - to ensure business is carried out in orderly, effective and efficient manner - to prevent and detect fraud and error - to ensure the timely preparation of reliable financial reporting - to ensure the compliance with the management policies, applicable laws and regulation Components of internal control system Control environment - the framework within which control operate, it is very much determined by the management of the business
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