Assignment in Ethics

I. Definition of Terms
Advertising The communication to the public of information as to the services or skills provided by
professional accountants in public practice with a view to procuring professional
business.
Audit Engagement A reasonable assurance engagement in which a professional accountant in public
practice expresses an opinion whether financial statements are prepared, in all material
respects (or give a true and fair view or are presented fairly, in all material respects,), in
accordance with an applicable financial reporting framework, such as an engagement
conducted in accordance with International Standards on Auditing. This includes a
Statutory Audit, which is an audit required by legislation or other regulation.
Assurance Client The responsible party that is the person (or persons) who: (a) In a direct reporting
engagement, is responsible for the subject matter; or (b) In an assertion-based
engagement, is responsible for the subject matter information and may be responsible
for the subject matter.
Audit Client An entity in respect of which a firm conducts an audit engagement. When the client is a
listed entity, audit client will always include its related entities. When the audit client is
not a listed entity, audit client includes those related entities over which the client has
direct or indirect control.
Immediate family A spouse (or equivalent) or dependent.
Close Family A parent, child or sibling who is not an immediate family member.
Independence (a) Independence of mind – the state of mind that permits the expression of a
conclusion without being affected by influences that compromise professional judgment,
thereby allowing an individual to act with integrity, and exercise objectivity and
professional skepticism. (b) Independence in appearance – the avoidance of facts and
circumstances that are so significant that a reasonable and informed third party would
be likely to conclude, weighing all the specific facts and circumstances, that a firm’s, or
a member of the audit or assurance team’s, integrity, objectivity or professional
skepticism has been compromised.
Financial Interest An interest in an equity or other security, debenture, loan or other debt instrument of an
entity, including rights, and obligations to acquire such an interest and derivatives
directly related to such interest
Indirect Financial Interest A financial interest beneficially owned through a collective investment vehicle, estate,
trust or other intermediary over which the individual or entity has no control.
Objectivity A combination of impartiality, intellectual honesty and a freedom from conflicts of
interest.
Professional Services Services requiring accountancy or related skills performed by a professional accountant
including accounting, auditing, taxation, management consulting and financial
management services.
Professional Accountant in A professional accountant, irrespective of functional classification (for example, audit,
public Practice tax or consulting) in a firm that provides professional services. This term is also used to
refer to a firm of professional accountants in public practice.
Related Entity An entity that has any of the following relationships with the client: (a) An entity that has
direct or indirect control over the client if the client is material to such entity; (b) An entity
with a direct financial interest in the client if that entity has significant influence over the
client and the interest in the client is material to such entity; (c) An entity over which the
client has direct or indirect control; (d) An entity in which the client, or an entity related to
the client under (c) above, has a direct financial interest that gives it significant influence
over such entity and the interest is material to the client and its related entity in (c); and
(e) An entity which is under common control with the client (a “sister entity”) if the sister
entity and the client are both material to the entity that controls both the client and sister
entity.
II. Duties, Responsibilities and Accountabilities of Professional Accountants
Part A
Duties Responsibilities Accountabilities
 Shall comply to the  Act in the public interest  Take into account whether a reasonable
following principles:  Not exclusively to satisfy the and informed third party, weighing all the
(1) Integrity (2) needs of an individual client specific facts and circumstances
Objectivity (2) or employer available to the professional accountant
Professional  Shall comply with Code of at the time, would be likely to conclude
 Competence and Due Ethics that the threats would be eliminated or
Care (4)  Exercise professional reduced to an acceptable level by the
Confidentiality (5) judgement application of the safeguards, such that
Professional Behavior  Take qualitative as well as compliance with the fundamental
 To identify, evaluate, quantitative factors into principles is not compromised
and address threats account when evaluating  may inadvertently violate a provision of
may be created, the significance of a threat this Code. Depending on the nature and
requiring the  consult with a member body significance of the matter, such an
application of different or the relevant regulator if inadvertent violation may be deemed not
safeguards encounters unusual to compromise compliance with the
 may be required to circumstances in which the fundamental principles provided, once
resolve a conflict in application of a specific the violation is discovered, the violation
complying with the requirement of the Code is corrected promptly and any necessary
fundamental would result in a safeguards are applied
principles. disproportionate outcome or
 shall, where possible, an outcome that may not be
refuse to remain in the public interest
associated with the  document the substance of
matter creating the the issue, the details of any
conflict if after discussions held, and the
exhausting all relevant decisions made concerning
possibilities, the that issue.
ethical conflict remains  may consider obtaining
unresolved professional advice from the
 take reasonable steps relevant professional body
to ensure that those or from legal advisors
working under the  shall make clients,
professional employers or other users of
accountant’s authority the accountant’s
in a professional professional services aware
capacity have of the limitations inherent in
appropriate training the services.
and supervision  There is a professional duty
 refrain from: (a) or right to disclose, when
Disclosing outside the not prohibited by law: (i) To
firm or employing comply with the quality
organization review of a member body or
confidential professional body; (ii) To
information acquired respond to an inquiry or
as a result of investigation by a member
professional and body or regulatory body; (iii)
business relationships To protect the professional
without proper and interests of a professional
specific authority or accountant in legal
unless there is a legal proceedings; or (iv) To
or professional right or comply with technical
duty to disclose; and standards and ethics
(b) Using confidential requirements.
information acquired
as a result of
professional and
business relationships
to their personal
advantage or the
advantage of third
parties.
 shall maintain
confidentiality,
including in a social
environment, being
alert to the possibility
of inadvertent
 disclosure, particularly
to a close business
associate or a close or
immediate family
member
 s shall be honest and
truthful and not: (a)
Make exaggerated
claims for the services
they are able to offer,
the qualifications they
possess, or
experience they have
gained; or (b) Make
disparaging
references or
unsubstantiated
comparisons to the
work of others.
Part B- Professional Accountants in Public Practice
Duties
 shall not knowingly  It is recommended that a
engage in any
business, occupation,
or activity that impairs
or might impair
integrity, objectivity or
the good reputation of  shall determine whether
the profession and as
a result would be
incompatible with the
fundamental principles  shall determine whether
 shall determine
whether acceptance
would create any
threats to compliance
with the fundamental
principles Before
accepting a new client
relationship
 hall evaluate the
significance of any
threats and apply
safeguards when
necessary to eliminate
them or reduce them
to an acceptable level
 shall take reasonable
steps to identify
circumstances that
could pose a conflict
of interest  need to obtain the client’s
 shall also determine
whether to apply one
or more of the
following additional
safeguards: (a) The
use of separate
engagement teams;
(b) Procedures to
prevent access to
information (for
Responsibilities Accountabilities
 Where it is not possible to reduce the
professional accountant in threats to an acceptable level, the
public practice periodically professional accountant in public
review acceptance practice shall decline to enter into the
decisions for recurring client client relationship.
engagements.  shall not accept a specific engagement
or shall resign from one or more
such reliance is warranted conflicting engagements when a conflict
when intends to rely on the of interest creates a threat to one or
advice or work of an expert more of the fundamental principles,
including objectivity, confidentiality, or
there are any reasons, professional behavior, that cannot be
professional or otherwise, eliminated or reduced to an acceptable
for not accepting the level through the application of
engagement, such as safeguards
circumstances that create 
threats to compliance with
the fundamental principles
that cannot be eliminated or
reduced to an acceptable
level by the application of
safeguards when o is asked
to replace another
professional accountant in
public practice, or who is
considering tendering for an
engagement currently held
by another professional
accountant in public
practice
permission, preferably in
writing, to initiate discussion
with an existing accountant
Once that permission is
obtained, the existing
accountant shall comply
with relevant legal and other
regulations governing such
requests. Where the
existing accountant
 example, strict provides information, it shall
physical separation of be provided honestly and
such teams, unambiguously.
confidential and  shall evaluate the
secure data filing); (c) significance of any threats
Clear guidelines for and apply safeguards when
members of the necessary to eliminate them
engagement team on or reduce them to an
issues of security and acceptable level when
confidentiality; (d) The asked to provide such an
use of confidentiality opinion
agreements signed by  If the company or entity
employees and seeking the opinion will not
partners of the firm; permit communication with
and (e) Regular review the existing accountant, a
of the application of professional accountant in
safeguards by a senior public practice shall
individual not involved determine whether, taking
with relevant client all the circumstances into
engagements account, it is appropriate to
 shall determine when provide the opinion sought.
providing any
professional service
whether there are
threats to compliance
with the fundamental
principle of objectivity
resulting from having
interests in, or
relationships with, a
client or its directors,
officers or employees.
For example, a
familiarity threat to
objectivity may be
created from a family
or close personal or
business relationship
 shall be independent
of the assurance
client. Independence
of mind and in
appearance is
necessary to enable
the professional
accountant in public
practice to express a
conclusion, and be
seen to express a
conclusion, without
bias, conflict of
interest, or undue
influence of others
Part C- Professional Accountants in Business
Duties Responsibilities Accountabilities
 may hold a senior  has a responsibility to  may be under pressure to act or behave
position within an further the legitimate aims in ways that could create threats to
organization. The of the accountant’s compliance with the fundamental
more senior the employing organization. principles. Such pressure may be explicit
position, the greater This Code does not seek to or implicit; it may come from a
will be the ability and hinder a professional supervisor, manager, director or another
opportunity to accountant in business from individual within the employing
 influence events,
practices and
attitudes. A
professional
accountant in
business is expected,
therefore, to  may promote the
encourage an ethics-
based culture in an
employing
organization that
emphasizes the
importance that senior
management places  l take reasonable steps to
on ethical behavior.
 ss shall not knowingly
engage in any
business, occupation,
or activity that impairs
or might impair
integrity, objectivity or
the good reputation of
the profession and as
a result would be
incompatible with the
fundamental principles
 only undertake
significant tasks for  o has responsibility for the
which the professional
accountant in
business has, or can
obtain, sufficient
specific training or
experience. A
professional
accountant in
business shall not
intentionally mislead
an employer as to the
level of expertise or
experience
possessed, nor shall a
professional
accountant in
business fail to seek
appropriate expert
advice and assistance
when required.
 shall neither
manipulate information
nor use confidential
information for
personal gain.
properly fulfilling that organization.
responsibility, but  ing. A professional accountant in
addresses circumstances in business may have been unknowingly
which compliance with the associated with misleading information.
fundamental principles may Upon becoming aware of this, the
be compromised professional accountant in business
shall take steps to be disassociated from
organization’s position, that information. In determining whether
provided any statements there is a requirement to report, the
made are neither false nor professional accountant in business may
misleading. Such actions consider obtaining legal advice. In
generally would not create addition, the professional accountant
an advocacy threat. may consider whether to resign.
maintain information for
which the professional
accountant in business is
responsible in a manner
that: (a) Describes clearly
the true nature of business
transactions, assets, or
liabilities; (b) Classifies and
records information in a
timely and proper manner;
and (c) Represents the facts
accurately and completely
in all material respects.
preparation or approval of
the general purpose
financial statements of an
employing organization
shall be satisfied that those
financial statements are
presented in accordance
with the applicable financial
reporting standards.