lec2 - 20/09/2010 Agenda Ethics & Legal Liability Recap...

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20/09/2010 1 2 RSM323 Auditing I: Fal 2010 Agenda Recap of Lecture #1 Overview General Ethics Rules of Professional Conduct Legal Liability 3 RSM323 Auditing I: Fal 2010 Recap of Lecture #1 Feedback answers Any questions before moving on? 4 RSM323 Auditing I: Fal 2010 Overview 5 RSM323 Auditing I: Fal 2010 Auditor Responsibility to Society Professional auditors have a set of moral, professional and legal responsibilities to society Moral and are covered under the study of Ethics Professional Responsibilities are covered under the Rules of Professional Conduct Legal Responsibilities are covered under Common and Statutory Law (Legal Liability) 6 RSM323 Auditing I: Fal 2010 General Ethics 7 RSM323 Auditing I: Fal 2010
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20/09/2010 2 General Ethics Ethics are the rules and principles for the proper conduct of an auditor in his/her professional work Ethics are necessary for respect and confidence from the public 8 RSM323 Auditing I: Fal 2010 General Ethics There are many ethical theories however there is no “set rule” for deciding what is an ethical decision – the answer will change with each circumstance As such it is good to follow an ethical decision process in which you consider all sides before making a decision 9 RSM323 Auditing I: Fal 2010 Rules of Professional Conduct (ROPCs) 10 RSM323 Auditing I: Fal 2010 Rules of Professional Conduct RSM323 Auditing I: Fal 2010 11 Each of the Public Accounting bodies in Canada (CA, CGA and CMA) have their own rules of professional conduct As per Ontario’s Public Accounting Act and its Public Accountants Council, all ROPCs for public accountants must contain common elements Section 200 Public Interest RSM323 Auditing I: Fal 2010 12 The single most important principle is that public accountants (PAs) must serve the public interest In order to do so, PAs must: Maintain the good reputation of the profession at all times Perform services with integrity and due care Sustain professional competence Perform all services with an objective state of mind Rule 204 Independence RSM323 Auditing I: Fal 2010 13 The concept of independence is critical to the public accounting profession Not only must a PA be independent in fact , he/she must also appear to be independent to others Independence in fact is a mental state and is difficult to prove Independence in appearance is the way people perceive your independence and is usually governed by legislation Therefore, PAs must identify threats to independence and apply safeguards for any significant threats that have been identified
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20/09/2010 3 Rule 204 Independence 1. Self-Interest Threat Objectivity is hard to prove when the PA may benefit personally because of a client For example, a PA may benefit personally due to: A financial interest in a client A loan or guarantee to or from a client Dependence on total fees from a client
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This note was uploaded on 05/09/2011 for the course RSM 323 taught by Professor Lisaharvey during the Spring '11 term at University of Toronto- Toronto.

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lec2 - 20/09/2010 Agenda Ethics & Legal Liability Recap...

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