Auditor & Assurance, Chapter 5

This chapter focuses on the ethical and professional behavior that is expected of you as an assurance provider. It is an important syllabus area which you need to be comfortable with, as ethical matters could arise in every type of exam question. You must be able to apply the ACCA's guidance on ethical matters to any given situation, but remember that common sense is usually a good guide. The guidance come from the ACCA's Code of Ethics and Conduct, which incorporates the IESBA International Code of Ethics for Professional Accountants.

We need ethics in our role as auditors because stakeholders place reliance on the work that we do and we are in a position of trust, so we want to make sure that we are, amongst other things, honest and objective; and that we don't do anything which could abuse this trust.

It is also necessary that we are independent of the company that we are auditing, as we seek to give confidence to users of the financial statements that we review. The key with independence is thatnnot only it is necessary to be independent of mind, but also independent in appearance - that is, we are perceived to be truly independent by the people around us.

We need to fully understand that specific threats or actions in relation to the ethical principles that are expected of us, and any safeguards that we can put in place to prevent these threats from becoming serious issue. We will consider that various situations that may impair our ability to remain objective or independent, as well as look at the appropriate course of action to respond to the situations.

This chapter also considers confidentiality, one of the ethical principles, in more detail. We have access to a company's sensitive Information, and are required to keep the information confidential. Generally speaking, we should always maintain confidentiality. However, sometimes we are put in a position where we may have to disclose Information, for example, for legal reasons. So we will also consider situations where discourse is allowed.

The final part of this chapter covers the business and ethical considerations about how auditors obtain work and the factors they need to think about before accepting an audit engagement. These factors include issues such as their assessments of management's integrity, and whether they have enough time and staffs to take on the audit work.