In business should consider informing appropriate

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Unformatted text preview: uary 2007] PART I: BY-LAWS ON PROFESSIONAL ETHICS 330.4 Where threats cannot be eliminated or reduced to an acceptable level, professional accountants in business should consider whether to refuse to perform the duties in question. If the professional accountant in business determines that refusal is appropriate the reasons for doing so should be clearly communicated. 105 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants [Issued January 2007] PART I: BY-LAWS ON PROFESSIONAL ETHICS Section 340 Financial Interests Financial Interests 340.1 Professional accountants in business may have financial interests, or may know of financial interests of immediate or close family members, that could, in certain circumstances, give rise to threats to compliance with the fundamental principles. For example, self-interest threats to objectivity or confidentiality may be created through the existence of the motive and opportunity to manipulate price sensitive information in order to gain financially. Examples of circumstances that may create self-interest threats include, but are not limited to situations where the professional accountant in business or an immediate or close family member: (a) Holds a direct or indirect financial interest in the employing organization and the value of that financial interest could be directly affected by decisions made by the professional accountant in business; (b) Is eligible for a profit related bonus and the value of that bonus could be directly affected by decisions made by the professional accountant in business; (c) Holds, directly or indirectly, share options in the employing organization, the value of which could be directly affected by decisions made by the professional accountant in business; (d) Holds, directly or indirectly, share options in the employing organization which are, or will soon be, eligible for conversion; or (e) May qualify for share options in the employing organization performance related bonuses if certain targets are achieved. or 340.2 In evaluating the significance of such a threat, and the appropriate safeguards to be applied to eliminate the threat or reduce it to an acceptable level, professional accountants in business must examine the nature of the financial interest. This includes an evaluation of the significance of the financial interest and whether it is direct or indirect. Clearly, what constitutes a significant or valuable stake in an organization will vary from individual to individual, depending on personal circumstances. 340.3 If threats are other than clearly insignificant, safeguards should be considered and applied as necessary to eliminate or reduce them to an acceptable level. Such safeguards may include: (a) Policies and procedures for a committee independent of management to determine the level of form of remuneration of senior management. 106 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants [Iss...
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