Questions and Answers
Which of the following statements about the attributes of a profession are correct?
Accountants have a fundamental duty or 'service ideal' towards?
The professional capabilities that accountants require in order to implement accounting systems and their constructs, and therefore to achieve appropriate reporting in each circumstance, include:
Accounting is used to measure and report on the level of performance by a manager or business unit. Which of the following is true?
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An accountancy firm was accused of failure to conduct an audit with due care, after disclosure of a material misstatement in the audited financial report of a major corporate client. As a result, the professional accounting body imposed a large fine on the firm for its unprofessional behaviour. What should NOT be a conclusion from this incident?
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The two categories of skills required by a member of CPA Australia are?
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Complete the following sentence: A CPA's technical knowledge, skills and experience (TKSE)
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According to Wilensky (1964), what is 'the pivot around which the claim to professional status revolves'?
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To fulfil its continuing professional development (CPD) learning requirements, a member of CPA Australia must undertake?
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According to Blanthorne's research, which are the most important skills for partnership appointments in CPA firms?
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Which of the following is NOT listed by IFAC's PAIB committee as a main activity of a professional accountant in business?
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Lucy is a CPA and works as a manager in a large corporate environment. She is subject to entrepreneurial pressures. Which of the following statements is NOT true?
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In comparison to a colleague employed in a larger organisation, an accountant employed by an SME will be involved in?
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Accountants employed in larger SMEs find continuing self-development of soft skills to be very important. According to a report by the IFAC PAIB Committee in 2008, this is particularly the case in relation to?
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An important attribute of professionalism is the exercise of professional judgment. Which one of the following statements is NOT consistent with this statement?
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The traditional view of professions as set out by Greenwood emphasized that, in comparison with non-professionals, a professional has:
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Buckley (1978) argued that with regard to the service ideal, society grants a profession monopoly power over professional affairs provided that
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An accountant who has committed fraud will be subject to
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With regards to the standing of the accountancy profession, complete the following sentence: 'Unchecked unethical behaviour by accountants will lead to
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Schön (1983) has argued that to make values-based professional judgments, the accountant must
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According to Carnegie and Napier (2010), 'deprofessionalisation' of accounting may result from over-emphasis on which one of the ideals of accounting professionalism?
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Which of the following measures was NOT taken by governments to restore the credibility of auditing and financial reporting in the early 2000s, following a number of financial scandals involving major companies and audit firms?
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Which of the following statements about the regulation of auditing in Australia is correct?
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For Australia, direct responsibility for monitoring the effectiveness of auditor independence requirements rests with?
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To ensure public trust is maintained in the accounting profession, which of the following traits should an individual professional accountant display?
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Which of the following is NOT a key role of the governing body of a profession?
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When the accountancy profession is criticised, which of the following is NOT usually cited as one of its negative traits?
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Which of the following is NOT an example of a penalty CPA Australia may give to a member when they are found guilty of behaving unethically?
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Can a CPA Australia member ever lose their job if they are found guilty of unethical behaviour?
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The authority for CPA Australia to investigate complaints against members under its investigation, discipline and appeals procedure comes from?
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The best decisions are made where which of the following intersect?
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In the traditional view of the profession, accountants are thought to act in
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Which of the following elements is least likely to characterise a profession?
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In the market-control view of the profession, accountants are thought to act in?
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Which three of the following are traditionally recognised as being attributes of a profession? (Select all that applies)(EG ID 1.1)
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Which three of the following features are included in the concept of ‘service ideal’? (Select all that applies) (EG ID 1.2)
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Which one of the following describes the way that accounting interacts with society and organisations?(EG ID 1.3)
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Which one of the following best describes professional judgment?(EG ID 1.4)
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Which one of the following is a likely implication for the accounting profession following the collapse of large companies such as Enron, HIH Insurance and Lehman Brothers?(EG ID 1.5)
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The corporate collapses of the early 2000s and those that occurred during the Global Financial Crisis had some important common themes that we must understand if, as professionals, we are to assist in preventing their recurrence.
Which three of the following were common themes of the corporate collapses? (Select all that applies)(EG ID 1.6)
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Which three of the following statements correctly describes a profession?(EG ID 1.7)
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Accounting meets the traditional attributes of a profession by upholding which three of the following?(EG ID 1.8)
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The multi-dimensional role of the professional accountant in a mid-sized business includes generating value through which three of the following?(EG ID 1.9)
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The Professional Accountants in Business (PAIB) Committee of IFAC has identified a multi-dimensional role for accountants in generating value for business including which three of the following?(EG ID 1.10)
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John and his supervisor Elizabeth work as auditors for a hedge fund. When they finalise their annual audit the valuation of the company is far higher than John expected, and he suspects Elizabeth has inflated the valuation to please management and ensure their bonuses. What should John do?(EG ID 1.11)
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Study Notes
TOPIC SUMMARY
1. Role of Accounting Profession: The accounting profession plays a crucial role in society by providing trusted and reliable information to support high-quality decision-making.
2. Definition of a Profession: The term "profession" is commonly used, but it's important to understand the distinguishing factors that set a profession apart from other occupations. Being a professional accountant involves specific obligations and benefits.
3. Attributes of a Profession: Part A of the module describes key attributes of a profession and delves into the meaning of being a professional accountant.
4. Influence on Society: Accountants' work significantly influences societal decisions, particularly in resource allocation. As a result, the profession is expected to act with integrity and in the best interests of society.
5. Compliance with Principles: Accountants must adhere to established professional principles, including governance, accountability, and ethics standards. This involves finding a balance between potentially conflicting interests.
6. Managing Competing Interests: The module explores different approaches to viewing and managing competing interests. Successfully balancing self-interest and public interest is essential for maintaining a "social contract" between the accounting profession and society.
7. Social Contract: The profession benefits from a "social contract" with society, wherein, in exchange for the value it creates, society allows economic rewards, self-regulation, and autonomy for the accounting profession.
8. Consequences of Imbalance: Failing to balance interests may result in the withdrawal of privileges. The module explores instances where such failures led to increased external regulation to enhance the credibility of the accounting profession.
9. Co-Regulation Approach: External regulation works in conjunction with self-regulation based on professional and ethical standards. Sanctions are imposed on those who breach these standards.
10. Adaptation to Technological Advances: The accounting profession is evolving in response to technological advancements like artificial intelligence. However, fundamental principles of integrity, objectivity, professional competence, confidentiality, and professional behavior remain unchanged.
11. Roles and Activities of Accountants: Part B of the module examines diverse roles and activities of professional accountants, emphasizing the importance of continuous development of technical skills, knowledge, and experience throughout their careers.
12. Soft Skills: Accountants need to complement technical skills with "soft skills" such as communication, persuasion, negotiation, and leadership. Developing these skills is crucial for effective performance, especially as responsibilities expand over time.
13. Professional Development: Accountants can enhance both technical and soft skills through experience and formal continuing professional development activities.
14. Diversity of Roles: Opportunities for accountants exist in various sectors and areas of expertise. Regardless of specific roles, accountants play diverse roles, creating relationships through their activities.
15. Glossary: Key terms used in the module are compiled in a glossary at the end of the study guide for reference.
PART A: ACCOUNTANTS AS MEMBERS OF A PROFESSION
1. Significant Impact: Accountants play crucial roles and contribute to decisions with substantial consequences for clients, organizations, and society at large.
2. Expectations of Professional and Ethical Conduct: Given their impact, accountants are expected to adhere to high standards of professional and ethical conduct in their work.
3. Exploring the Meaning of a 'Profession': This module section delves into the concept of a 'profession' and what it entails to be a professional in the accounting field.
4. Core Idea of a Profession: At the heart of any profession is the commitment of its members to act in the best interests of society. In return, society provides various benefits to the profession.
5. Implied Social Contract: The relationship between the accounting profession and society is characterized by an implied social contract. This contract expects accountants to act in the best interests of society, and in return, society grants certain benefits to the profession.
6. Maintenance of the Social Contract: To uphold the social contract, accountants must align their work with the core principles of the profession.
7. Professional Principles: Adherence to professional principles is crucial for accountants in fulfilling their part of the implied social contract.
1.1 PUBLIC INTEREST OR SELF INTEREST?
1. Importance of Information Flow: Efficient functioning of economies and societies relies on the free flow of accurate information. Market economies, in particular, depend on the disclosure of precise financial and non-financial information.
2. Integral Role of Accounting Profession: The accounting profession plays a crucial role in ensuring access to accurate information. Professional accountants are responsible for analyzing and presenting information, requiring a clear distinction between the public interest and any sense of self-interest.
3. Retaining Integrity and Authority: The accounting profession can only maintain its integrity and authority by prioritizing the wider public interest. Trust is identified as the essential foundation of business, aligning with the ideals of professionalism and entrepreneurship.
4. Role of Accounting Information: Accountants serve the public interest by creating and disseminating information that provides a clear and accurate depiction of an entity's financial performance, position, and other relevant matters. This information is heavily relied upon by decision-makers involved in resource allocation.
5. Objective Financial Advice: Professional accountants contribute to the public interest by offering objective, accurate, and unbiased financial and accounting-related advice based on expertise. This emphasis on integrity and objectivity is associated with the concept of altruism, where positive actions are taken without personal benefit.
6. Altruism vs. Self-Interest: While altruism is linked to positive actions without personal gain, concerns are raised by some, such as Larson (1977), who suggests that monopolistic professionals may be motivated by self-interest rather than a service ideal or public interest. This self-interest is described as enlightened self-interest rather than altruism, and suggests that professionals are about maintaining monopolies and extracting unwarranted wealth and influence from the position.Attributes of a Profession
- They are attributes that non-professional occupations may exist, but to a lesser extent than in professions.
- Attributes that make it possible to distinguish clearly between professions and non-professional occupations.
RESPONSIBLE DECISION MAKING
1. Systematic Decision Making: Accountants follow a systematic framework of principles, including governance, accountability, and ethics, when making decisions.
2. Professional Governance Framework: Accountants, as members of the profession, cannot base decisions on personal preferences. Their skills and knowledge must align with the governance framework of the profession, which includes specified codes of behavior.
3. Entity Governance Framework: Decision making is within the governance framework of the entity where the accountant works. This includes compliance with internal governance rules, policies, and strategies approved by the governing body.
4. Accountability Requirements: Accounting work and decisions must comply with accountability requirements set by regulatory authorities. Appropriate disclosure to shareholders and stakeholders is necessary.
5. Framework of Ethical Conduct The work and decisions of accountants should adhere to a framework of ethical conduct, demonstrating a commitment to integrity and honesty in serving professional purposes and client interests.
6. Effective Action and Decision Making: Recognition and application of these principles enable effective action and decision-making, resulting to more authoritative assignments completed within a framework of governance, accountability, and ethics.
7. Striving for Balance: Accountants should strive to base their decisions on the interconnected principles of governance, accountability, and ethics. The ideal position for balanced decisions is at the centre of this framework, where these three principles intersect.
8. Rigorous and Professional Conduct: Achieving the ideal position requires accountants to uphold rigorous and professional conduct. However, the text notes that this may not always happen, as exemplified by the costly error described in Example 1.1.
9. Example 1.1 - A Costly Error: The example narrates a legal battle involving a consulting company, an accounting partnership, and an executive director. The error in calculations led to financial losses for the client, Neville’s Bus Service Pty Ltd, resulting in a $5.5 million legal dispute. The error was alleged to be fraudulent, in breach of contract, negligent, and in violation of Australian Consumer Law. The example underscores the importance of rigorous decision-making and adherence to professional principles.
Neville’s Bus Service Pty Ltd v Pitcher Partners Consulting Pty Ltd [2018]
1.2 ENLIGHTENED SELF-INTEREST
1. Economic Self-Interest in Market Economy: In a market economy, the economic self-interest of a profession is a significant behavioral driver. However, it should never overshadow the primary commitment to the public interest.
2. Enlightened Self-Interest: The concept of 'enlightened self-interest' suggests that it is possible to simultaneously commit to the public interest and maintain a degree of self-interest. The idea is encapsulated in the phrase 'doing well by doing good.'
3. Balancing Public Interest and Self-Interest: While enlightened self-interest acknowledges the pursuit of both purposes, purely self-interested actions without benefit to other parties, such as clients, are deemed unacceptable professional behavior.
4. Primacy of Public Interest: There must be a careful balance between serving the public interest and pursuing self-interest, with the public interest being paramount. The integration of public interest and self-interest is a critical aspect of enlightened self-interest.
5. Lee's Description: Lee (1995) describes enlightened self-interest as protecting the public interest in a self-interested manner. The accounting profession, in this context, justifies its existence by contributing to the efficiency benefits for society as a whole. Accountants, in exchange for their monopoly position, view themselves as serving the public interest.
The accounting profession would account for its existence in relation to the efficiency benefits for society as a whole, arising from the existence of an institutionally organised body of accounting knowledge … In return for their monopoly position concerning the right to practise particular accountancy and auditing functions, accountants would see themselves as serving the public interest (Robson & Cooper 1990, p. 379).
6. Integration of Public Interest and Self-Interest: The idea of enlightened self-interest involves integrating the public interest and self-interest in a mutually beneficial manner. This concept will be revisited in module 5, exploring why organizations commit to producing sustainability information and reports.
1.3 IDEALS OF ACCOUNTING – ENTREPRENEURIALISM AND PROFESSIONALISM
1. Ideals of Accounting: There are debates about whether professions, including accounting, truly have a public interest or service ideal (Abbott 2014; Johnson 1972). Some argue it never existed, while others believe it may have been abandoned for more lucrative roles, like being a 'partner in business' (Saravanamuthu 2004).
2. Four Es of Accounting Professionalism: Carnegie and Napier (2010) identify the ideals of accounting professionalism as
- education,
- ethics,
- expertise, and
- entrepreneurship.
Emphasizing entrepreneurship too strongly, at the expense of other ideals, may lead to the de-professionalization of accounting, wealth vs public service.
3. Ethics versus Profits Dilemma: Accountants, often in positions of power, may face dilemmas between ethics and profits. Historical examples, such as corporate collapses in the early 2000s and the Global Financial Crisis (GFC) of 2008–2009, highlight instances where self-interested actions conflicted with ethical or professional standards.
4. Example 1.2 - Excessive Fees: Liquidators John Sheehan and Ian Lock were ordered by a court to repay $1.9 million plus interest due to excessive fees. The Australian Securities and Investments Commission (ASIC) took action, stating that the fees reduced the amount available for creditors. This example illustrates a conflict between self-interest and the public interest.
5. Example 1.3 - In the Interests of the Client?: Gold Coast accountant Jenan Oslem Thorne faced consequences for failing to prioritize client interests. ASIC found that Thorne advised clients to establish self-managed superannuation funds without considering their circumstances, recommending her services to "create extra revenue for herself." This case exemplifies a conflict between professional obligations and self-interest.
1.4 WHAT IS A PROFESSION?
1. Definition of a Profession:
- Defined as an occupational area requiring special training or skill, often with a high level of education.
- It is characterized by a high level of competence and skill learned through specialized training, and maintained by continuing professional development, as well as ethical behavior, serving the best interests of society.
2. 8 Key Attributes of a Profession:
- Systematic body of theory and knowledge
- Extensive education process for members
- Ideal of service to the community
- High degree of autonomy and independence
- Code of ethics for members
- Distinctive ethos or culture
- Application of professional judgment
- Existence of a governing body
3. Attributes of Professions:
- Focus on intellectual or administrative skills rather than physical actions.
- Critical nature of work and specialized knowledge required.
- Universal professionalization across diverse occupations.
- Establishment of professional bodies and codes of conduct.
- Efforts to raise standards through training, education, and quality standards.
4. Professionalization Across Occupations:
- The process of professionalization is occurring across various occupations. Many professions have established bodies and codes of conduct to raise standards.
5. Occupation vs. Profession:
- Continuum in the degree to which the attributes of a profession are displayed, distinguishes professionals from non-professionals. Professionals are distinguished from non-professionals by higher standards.
- The distinction between an occupation and a profession is not always clear.
- Greater status and wealth associated with professions due to specialized skills and a level of monopoly control, where licensing rules and regulations establish control over who can work in the industry.
6. Social Contract and Service Ideal:
- Professions exist due to an implied social contract (Brourard et al. 2017).
- The service ideal emphasizes serving society and acting in the public interest.
- Implied social contract grants benefits like self-regulation, autonomy, market control and economic rewards. This is shown in the figure:
7. Breakage of Social Contract / Example of Regulatory Changes:
- When the social contract is broken, some benefits may be removed or modified.
- For instance, laws may change to tighten regulations. The example of bringing auditing standards under the purview of the FRC in 2004 due to corporate collapses in the early 2000s, demonstrating community-driven regulatory changes.
SELF REGULATION
1. Permission and Regulatory Process:
- Professions typically require regulatory permission to offer services to the public.
- Example: Only doctors of medicine may prescribe certain drugs by law in many countries.
2. Independence and Autonomy:
- Upon receiving permissions, professions often have significant independence or autonomy.
- Allows them to set their own rules and regulations with less detailed government oversight.
3. Self-Regulation Extends to Membership:
- Professional bodies have autonomy to regulate membership and set membership rules.
- They establish education requirements, ethical standards, and disciplinary processes.
4. Advantages of Autonomy in Self-Regulation:
- Members judged by informed peers rather than limited regulators.
- Allows for internal penalties or sanctions for ethical breaches not covered by legal processes.
5. Extra-Legal Role in Regulation:
- Professions regulate members beyond statutory or common law through extra-legal means.
- Expectations of conduct set in constitutions and by-laws, enforced through disciplinary processes.
6. Disciplinary Action and Penalties:
- Conduct bringing disrepute to the profession can result in penalties.
- Penalties may include forfeiture or expulsion from professional membership.
- Disciplinary outcomes often involve public disclosure of misconduct details.
FROM SELF REGULATION TO A CO-REGULATORY PROCESS
1. Service Provision and Trust:
- Members of a profession provide services in their expertise area, benefiting society.
- Society trusts the profession to act in its best interest and values the services provided.
2. Risk of Autonomy without Regulation:
- Autonomy can lead to negative outcomes if self-control and regulation are lacking.
- Failure to hold members accountable for inappropriate behavior undermines societal trust.
3. Erosion of Trust in Accounting Profession:
- Numerous corporate failures and unethical conduct eroded trust in the accounting profession.
- Loss of trust leads to diminished value and status of the profession.
4. Shift from Self-Regulation to Co-Regulation:
- Authority for self-regulation reduced due to erosion of trust.
- Move towards co-regulation involves sharing regulation between the profession and external sources.
5. Examples of Co-Regulation:
- FRC oversees accounting and auditing standard setters.
- Corporations Act gives auditing and accounting standards legal force.
- ASIC Act 2001 (Cwlth) establishes the Companies Auditors Disciplinary Board.
- TPB serves as the registering authority for taxation professionals.
- Professional bodies like CPA Australia monitor compliance with ethical standards and laws.
6. Role of Each Organization:
- Each organization plays a role in monitoring compliance of accounting professionals with ethical standards and laws.
1.5 WHAT IS A PROFESSIONAL?
1. Definition of 'Professional':
- Refers to members of a profession.
- Signifies significant training, high competence, and skills in a specific area of knowledge.
- Behave ethically and applies skill and judgment in areas of importance.
2. Professional Development:
- Evolution from a technician to a professional involves utilizing knowledge and experience to make judgments in the public interest.
- Technician: Possesses technical knowledge for specific tasks.
- Professional: Utilizes knowledge and experience for broader decision-making.
3. Traditional or Functional View of Professionalism:
- Also known as the traditional or functional view.
- Recognizes professions for undertaking complex tasks and functions on behalf of society.
- Professions hold a privileged position in society due to their societal contributions.
1.6 THE ACCOUNTING PROFESSION – THE ‘TRADITIONAL’ VIEW AND THE ‘MARKET CONTROL’ VIEW
1. Traditional View of the Accounting Profession:
- Attributes focused on serving society.
- Professional accountants act for the public interest rather than self-interest.
- Attributes include:
1) Systematic body of knowledge.
2) Extensive education process.
3) Code of ethics.
4) Ethos or culture.
5) Governing body.
2. Market Control View of the Accounting Profession:
- More critical perspective.
- Suggests professional accountants are self-interested.
- Less concerned with broader public interest, more focused on own careers.
- Accounting profession seen as creating a monopoly to ensure only certain people can work in the field.
- Aims to generate greater financial returns and build status and prestige.
3. Perceptions of Professions:
- Not universally valued.
- Service ideal replaced by visible greed for some.
- Some perceive professionals as self-serving monopolists.
- Professional bodies accused of maintaining membership exclusivity to preserve monopoly.
4. Example 1.4 - Andersen's Self-Interest:
- Andersen (formerly Arthur Andersen) audited HIH, Australia’s largest insurance company.
- HIH experienced rapid and spectacular failure, similar to Enron's in the US in 2001/2002.
- Arthur Andersen also audited Enron and WorldCom, both experiencing major bankruptcies despite clean audit reports.
- Andersen went out of business due to its role in the Enron failure.
- Three former partners of Andersen sat on the HIH board, raising questions about independence.
- This example highlights the negative impact on the accounting profession's reputation, replacing positive images with perceptions of self-interest.
5. Shift in Perception:
- Images of altruism, ethical service, and self-regulation have been supplanted by a portrayal of professions as self-interested collectives.
1.7 TRUST AND PROFESSIONS
1. Society's Expectations of Professions:
- § Society demands professions to handle complex economic and social matters.
- § Expects high individual capability and application of professional ethics.
- § Professionals make complex judgments impacting individuals, economies, and societies.
2. Importance of Public Trust:
- § Public perception determines rights granted to professions and professionals.
- § Public trust is crucial for any profession.
- § Loss of credibility can have severe consequences for the public, the profession, and its members.
3. Credibility Crisis in Accounting Profession:
- § After Enron, WorldCom, and HIH collapses, and Arthur Andersen's demise, accounting profession faced a credibility crisis.
- § Global financial crisis (GFC) caused doubts about accounting standards and reliability of accountants' work.
- § Institutional failure, business collapses, and doubts about financial information integrity affected all society levels.
4. Trust Issues in Financial Services:
- § Parliamentary inquiries highlighted trust issues in financial services advice.
- § Hayne Royal Commission revealed advisers prioritizing own gains through incentive-based remuneration.
- § Some advisers sold products benefiting them more than clients.
- § Reflections on ethical and professional behavior in financial services and service to vulnerable people ensued.
Consider This: Preserving Relevance, Credibility, and Trust:
- § Continuously uphold and adhere to professional ethics and standards.
- § Engage in transparent communication and accountability to build and maintain trust.
- § Embrace ongoing education and professional development to stay current and competent.
- § Establish effective self-regulation mechanisms within the profession.
- § Proactively address issues, learn from mistakes, and demonstrate a commitment to improvement.
- § Collaborate with regulatory bodies and participate in initiatives that enhance the profession's integrity.
- § Foster a culture of ethical conduct and social responsibility within the profession.
1.8 EIGHT TRADITIONAL ATTRIBUTES OF A PROFESSION (GREENWOOD 1957)
1. Systematic Body of Theory and Knowledge:
- § The accounting profession possesses a systematic body of theory and knowledge, including principles, standards, and practices that guide accounting professionals in their work.
- § a profession has a specialised, unique body of knowledge, skills and competencies that members of the profession must possess.
2. Extensive Education Process:
- § Becoming a professional accountant requires a comprehensive education process, often involving formal education, professional qualifications (such as CPA or CA), and ongoing professional development.
- § professionals must obtain the profession’s body of knowledge, often initially through university education, and engage in formal continuing professional development throughout their professional lives.
3. Ideal of Service to the Community:
- § The accounting profession is guided by an ideal of service to the community, where accountants are expected to act in the public interest and contribute to societal well-being.
- § an implied social contract exists between a profession and society based on the core notion that the profession will act in the public interest.
4. High Degree of Autonomy and Independence:
- § Professionals in accounting often enjoy a high degree of autonomy and independence in their roles, allowing them to exercise professional judgment without undue external influence.
- § society grants professions considerable autonomy and independence in return for consistently demonstrating that they are acting in accordance with their professional and ethical standards and in the best interests of society.
5. Code of Ethics:
- § The accounting profession adheres to a code of ethics that outlines the principles and standards governing the behavior of its members. This code emphasizes integrity, objectivity, professional competence, and confidentiality.
- § members of a profession are required to practise in accordance with a formal code of ethics that establishes principles for good conduct.
6. Distinctive Ethos or Culture:
- § The accounting profession has a distinctive ethos or culture characterized by a commitment to accuracy, transparency, and accountability in financial reporting and decision-making.
- § a profession adopts a set of values that are expressed in behaviours, documents and symbols that together form and reinforce the profession’s ethos and culture.
7. Application of Professional Judgement:
- § Professional accountants regularly apply professional judgment in interpreting financial information, advising clients, and making decisions within the framework of ethical and professional standards.
- § a profession is distinguished by the regular use of judgement, rather than mere application of rules, to make decisions on situations and problems that involve uncertainty and competing interests.
8. Existence of a Governing Body:
- § The accounting profession is governed by regulatory bodies and professional organizations (e.g., AICPA, ACCA) that establish and enforce standards, oversee professional conduct, and contribute to the development of the profession.
- § professions maintain a peak body that brings members together, establishes professional standards of conduct, assures the quality of the profession and disciplines its members.
Reviewing Greenwood's attributes in light of professional experiences may lead to nuanced perspectives and potential additions to reflect the evolving nature of the profession.
Additional Attributes:
- § Adaptability: Given the evolving business landscape, the ability of professionals to adapt to new technologies and changing environments is crucial.
- § Global Perspective: In an interconnected world, having a global perspective and understanding international accounting standards is increasingly important.
- § Continuous Improvement: A commitment to continuous improvement and learning to stay relevant in a dynamic professional landscape.
A SYSTEMATIC BODY OF THEORY AND KNOWLEDGE
1. Superior Skill vs. Professional Status:
- § The distinction between a profession and other occupational groups isn't solely based on superior skill.
- § Many occupations requiring high manual skill may not be recognized as professions.
- § The crucial factor is the possession of a well-founded body of knowledge supporting a range of skills and expertise.
2. Theory Construction and Systematic Research:
- § A profession is developed and sustained through theory construction achieved by systematic research.
- § This research-driven approach forms an essential foundation for professional practice.
3. Lifelong Learning in Accounting:
- § The educational process for accountants emphasizes lifelong learning, starting with the initial study of accounting.
4. IFAC's Role and International Education Standards:
- § The International Federation of Accountants (IFAC) plays a key role in setting standards for the accounting profession.
- § IFAC has issued International Education Standards outlining core competencies for aspiring accountants.
5. Membership and Adherence to Standards:
- § IFAC member bodies, including CPA Australia, must adhere to these standards.
- § These standards guide the design, content, and assessment of education programs to ensure an equivalent level of competence and knowledge among all accounting professionals.
6. Comprehensive Standards Coverage:
- § IFAC's standards encompass technical knowledge, soft skills, and professional competence.
- § They serve as a framework for professional bodies to guarantee the quality of their education programs.
In summary, the passage highlights the importance of a well-founded body of knowledge supported by systematic research for the development of a profession. It also emphasizes the role of lifelong learning, international standards, and the adherence of professional bodies to ensure competence and quality education in the accounting profession.
AN EXTENSIVE EDUCATION PROCESS
In summary, the passage underscores the importance of continuous learning throughout an accounting professional's career, facilitated by standards set by organizations like IFAC and professional bodies like CPA Australia. This commitment to ongoing development ensures accounting professionals remain relevant and competent in their field.
1. Membership and Professional Knowledge:
- § Joining a professional body (e.g., accounting association) indicates a foundational understanding of the theory and practice of accounting.
- § This knowledge and skill set distinguishes accounting professionals from the general public.
2. Ongoing Enhancement of Knowledge and Skills:
- § Professionals ik accounting continuously enhance their knowledge and skills.
- § This involves gaining experience through mentorship, participating in professional development programs, and engaging in continuing education initiatives.
3. Lifelong Learning Commitment:
- § There is a commitment to lifelong learning within the accounting profession.
- § Professionals recognize the dynamic nature of the field and the need to stay updated on evolving practices, regulations, and technologies throughout their careers.
4. IFAC Standards for Ongoing Professional Development:
- § The International Federation of Accountants (IFAC) sets standards for ongoing professional development.
- § IFAC has issued a standard outlining the requirements for ongoing professional development, likely covering guidelines for the type, duration, and frequency of professional development activities.
5. CPA Australia's Ongoing Professional Development:
- § Members of CPA Australia, as an example of a professional body, are required to engage in ongoing professional development.
- § This ensures that all members, regardless of career stage, participate in activities contributing to the maintenance and enhancement of their professional competence.
AN IDEAL OF SERVICE TO THE COMMUNITY
1. Service Ideal and Professional Status (Wilensky 1964):
- § The service ideal is considered the pivot around which the moral claim to professional status revolves.
2. Role of Accounting in Public Interest:
- § Accountants play a crucial role in serving the public interest by presenting reliable and comparable information, monitoring past performance, and facilitating rational decision-making.
3. Public Trust and Social Contract (Buckley 1978, Wilensky 1964):
- § Professions are granted monopoly power over professional affairs by society, provided they use this power in the public interest.
- § Any profession abandoning the service ideal risks losing the moral claim to professional status.
- § Continued erosion of public trust may lead to extreme governmental intervention, reducing autonomy, authority, and reputation.
4. Social Contract and Reputation:
- § The erosion of public trust due to unethical behavior may lead to government intervention, risking autonomy, authority, and reputation of the profession.
5. Responsibility of Professionals:
- § Each professional has a responsibility to maintain the reputation of the profession through ethical behavior.
6. APES 110 Code of Ethics:
- § The APES 110 Code of Ethics for Professional Accountants outlines fundamental principles for acceptable professional conduct, emphasizing responsibility and integrity.
7. Service Ideal from Three Perspectives:
- § Examining the service ideal from three perspectives: wellbeing of society, pursuit of excellence, and community service.
8. Wellbeing of Society:
- § Accountants contribute to the efficient functioning of businesses, non-profits, and government enterprises, facilitating better decision-making.
- § Financial information is crucial for advancing the interests of parties at all levels, leading to the betterment of society.
9. Pursuit of Excellence:
- § Professionals are individually responsible for maintaining knowledge, updating skills, and applying competence with due care, ensuring the highest standards in the best interests of society.
10. Community Service and Pro Bono Work:
- § Accountants often engage in pro bono work, contributing their skills and time to various community endeavors for public good.
- § Examples include membership in finance committees, providing financial counseling to community welfare groups, and holding honorary positions in various organizations.
11. Equal Responsibility for All Work:
- Professionals are held to the same level of responsibility, whether the work is paid or unpaid, emphasizing consistent ethical standards across all endeavors.
A HIGH DEGREE OF AUTONOMY AND INDEPENDENCE
1. Autonomy and Independence in Professions:
- § Professions, including accounting, are traditionally granted a high degree of autonomy and independence as part of the trust relationship with the community.
- § This autonomy is often termed as self-regulation, where professions regulate themselves based on established professional and ethical standards.
2. Evolution of Co-Regulation:
- § Instances of unprofessional conduct and corporate failures have led to changes in the level of autonomy for the accounting profession.
- § The accounting profession, which once had full control over standard-setting processes, now operates in a co-regulatory environment in conjunction with external authorities.
3. Example of Co-Regulation in Australia:
- § Accounting standards in Australia were initially developed and controlled by professional accounting bodies.
- § Changes in laws led to a shift in control, and now the Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB) report to the Financial Reporting Council (FRC), a government body.
- § The professional bodies still have involvement but within a framework of external regulation.
4. Member Autonomy and Professional Judgment:
- § Individual member autonomy is vital for exercising professional judgment free from external influence or the risk of financial gain or loss.
- § Autonomy implies a self-principled, ethical, and responsible approach, governed by the member's own professional rules and laws.
5. Importance of Independence for Accountants in Public Practice:
- § Independence becomes crucial, especially for accountants in public practice, in maintaining objectivity and integrity.
- § Accountants may face dilemmas between client requirements and ethical obligations, testing their professional ethics.
- § Upholding independence ensures that the accountant adopts the most appropriate position, aligning with ethical principles and professional obligations.
CO-REGULATION AND PROFESSIONAL DISCIPLINE
1. Co-Regulation and Professional Discipline:
- § Co-regulation involves the profession regulating itself in conjunction with external authorities.
- § This approach aims to maintain a high level of professional practice in the public interest and uphold the profession's reputation.
2. Regulatory Structures for the Public Accounting Profession:
- § Various regulatory structures and practices are in place for the public accounting profession.
- § These structures aim to define the technical and ethical responsibilities accountants owe to employers, clients, third parties, and the public.
3. Regulatory Structures of CPA Australia:
- § CPA Australia, as an example, has established regulatory structures including:
- § System of accreditation for accounting degree programs to ensure the acquisition of relevant knowledge.
- § Membership qualification process involving examinations and required practical experience.
- § High levels of continuing professional education.
- § Code of ethics that members must comply with.
- § Disciplinary process to address member misconduct.
4. Code of Ethics Overview:
- § The code of ethics is a significant component of regulatory structures, outlining the ethical standards and conduct expected of members.
- § Compliance with the code of ethics is a fundamental requirement for members of professional accounting bodies.
5. Role of APESB and Disciplinary Procedures:
- § The module later discusses the role of the Accounting Professional and Ethical Standards Board (APESB) and the disciplinary procedures aimed at enforcing compliance with accounting and auditing standards.
A CODE OF ETHICS FOR MEMBERS
1. Code of Ethics for Members:
- § Professional ethics are outlined in codes of professional ethics, such as APES 110 and various APES statements, as well as the Constitution of CPA Australia.
- § These codes establish expected standards of behavior and emphasize the need for members to act in the public interest.
2. Legal Framework:
- § Members of CPA Australia must adhere to relevant legislation, including corporate law, accounting, and audit standards regulation.
- § The legal framework, along with professional codes, provides guidance and a disciplinary framework for members.
3. Unprofessional Behavior:
- § Behavior consistent with the Code of Ethics is considered professional, while behavior contravening the Code is deemed unprofessional.
- § The Code aims to deter unethical conduct and promote desirable behavior by specifying acceptable and unacceptable conduct.
4. Global Challenges in Ethics:
- § In a global market, different cultures may have varying perspectives on acceptable and unacceptable behaviors.
- § Professional accountants face challenges in navigating ethical guidelines while respecting diverse cultural norms.
- § An example cited is the varying acceptance of practices like bribery in different countries, emphasizing the need for a principled approach in the face of cultural differences.
A DISTINCTIVE ETHOS OR CULTURE
1. Ethos or Culture of a Profession:
- § Consists of values, norms, and symbols that define the identity and character of a profession.
- § Values are core ideas observed by individuals, groups, or communities, often embedded in documents like constitutions.
- § Norms include both formal and informal characteristics, shaping the professional culture and creating a sense of belonging.
- § Symbols encompass insignia, emblems, certification, and titles associated with the profession.
2. Creation of Culture:
- § New members learn about the culture and ethos through formal history, milestones, jargon, stereotypes, folklore, and dress codes.
- § Establishing a culture and sense of belonging is crucial for maintaining a vibrant professional organization.
3. Symbols of Professions:
- § In professions like law, symbols may include gowns, wigs, and scales. In medicine, symbols could be the Hippocratic Oath, the Rod of Asclepius, or the Caduceus.
4. Integration into the Profession:
- § New members must actively learn and contribute to the ethos and culture of the profession for evolutionary growth.
- § Contribution to the ethos ensures positive changes aligned with the community's and the profession's interests.
5. CPA Australia Ethos:
- § For CPA Australia members, the ethos is founded on the word 'integrity,' emphasizing the importance of ethical conduct in the accounting profession.
APPLICATION OF PROFESSIONAL JUDGEMENT
1. Professional Judgement (Becker 1982):
- § Becker argues that professional judgement is the key attribute that differentiates professionals from non-professionals.
- § Acquiring knowledge through education is important, but true professionalism involves the ability to solve complex, unstructured, values-based problems.
2. Distinguishing Professional Judgement (Schön 1983):
- § Professionals must have an awareness of uncertainty, complexity, instability, uniqueness, and value conflict in problems.
- § Key difference lies in dealing with complex social values and choosing outcomes that align with the social ideal of professions.
3. Competency in Professional Judgement (Schön):
- § Professionals are required to develop competency in professional judgement, artistry, and intuition.
- § This competency is crucial not only for problem-solving but also for identifying and defining the right problems to be solved.
4. Communication and Problem Setting (Schön):
- § Professionals need to communicate skillfully with clients or employers to identify and solve the right problems.
- § Emphasis on problem setting rather than just problem solving is essential for gaining the wisdom required for values-based professional judgements.
5. Auditing and Professional Judgement (Various):
- § Auditing, a domain where professional judgement is extensively tested, involves critical decisions in various dimensions of the process.
- § Key judgements in auditing include identifying those charged with governance, determining the level of assurance, budgeting, planning the audit, and evaluating results.
6. Importance in Accounting (West 2003):
- § Accounting, as a profession, constantly involves the exercise of judgement.
- § West suggests that without judgement, accounting risks becoming a mere book of rules for compliance, losing its genuine service-oriented nature.
7. Impact of Professional Judgement in Auditing (Various):
- § Many questions about professional judgement in accounting, especially in auditing, have arisen in legal contexts, highlighting the societal impact of auditors' judgements.
THE EXISTENCE OF A GOVERNING BODY
1. Importance of a Governing Body:
- § A profession must have a governing body chosen democratically from its membership.
- § The governing body is responsible for ensuring the achievement and maintenance of key attributes of a profession.
2. Roles and Responsibilities of the Governing Body:
- § Speak for the profession, particularly on issues of public policy affecting independence and autonomy.
- § Ensure new entrants meet education standards, and existing practitioners stay updated with developments.
- § Encourage and monitor high standards of professional conduct.
- § Have the power to discipline members who violate professional conduct standards, ensuring peer judgment without public interference.
- § Ensure high standards of performance and conformance within the professional body, establishing policies, strategies, and codes of conduct.
3. Credibility and Effectiveness:
- § The governing body must be credible and effective in the eyes of both members and the public.
- § Community perception of a profession is influenced by the actual behavior of the profession and its members.
4. IFAC as the Governing Body for the Accounting Profession:
- § The accounting profession is governed by the International Federation of Accountants (IFAC).
1.9 THE PROFESSIONAL’S REGULATORY PROCESS
ACCOUNTING PROFESSIONAL AND ETHICAL STANDARDS BOARD
1. APESB Background:
- § APESB (Accounting Professional and Ethical Standards Board) is an independent body responsible for setting professional standards for accountants.
- § The establishment of APESB was announced on November 4, 2005, by CPA Australia and CA ANZ.
- § APESB was created to set ethical requirements independently, transferring this responsibility from professional accounting bodies to an impartial entity.
2. Regulatory Landscape:
- § Autonomy in setting accounting and auditing standards has been challenged, with these powers transferred to AASB (Australian Accounting Standards Board) and AUASB (Auditing and Assurance Standards Board), which report to the FRC (Financial Reporting Council).
- § Auditing standards, having the force of law under the Corporations Act, mean auditors must comply with AUASB-issued standards.
- § The establishment of APESB was prompted by the need for a more rigorous and transparent process for setting ethical requirements.
3. Formation and Membership of APESB:
- § APESB is composed of a technical board and a secretariat.
- § CPA Australia, CA ANZ, and the IPA (Institute of Public Accountants) are members of APESB, and their respective members are required to abide by APESB standards.
4. Role and Responsibilities of APESB:
- § APESB reviews professional and ethical standards annually, monitoring the needs of the accounting profession and the public.
- § It reviews the implementation of new and amended standards within six months of issue.
- § Refers matters to the secretariat for research, direction, and amendment.
- § Seeks comments on exposure drafts for proposed standards from the public, professional bodies, and their members.
- § Monitors the effectiveness of professional and ethical standards.
5. Public Scrutiny and Transparency:
- § The profession aims to increase public confidence by opening the standard-setting process to greater public scrutiny.
- § APESB's composition includes representatives from the public sector, corporate sector, audit profession, academia, and the general public.
- § Seeking comments on exposure drafts from various stakeholders contributes to transparency and inclusiveness in the standard-setting process.
THE QUALITY ASSURANCE PROCESS
1. Quality Assurance Process:
- § Every profession, including accounting, is concerned about the quality of its services, particularly regarding the integrity of information provided to employers, clients, and stakeholders.
- § The accounting profession has developed a multi-level regulatory framework to ensure quality in various activities of private and public sector organizations.
2. Standard Setting:
- § The FRC oversees standard setting, with the AASB dealing with accounting standard setting and the AUASB dealing with auditing standards.
3. Conformity with Standards:
- § APESB issues mandatory statements, such as APES 205 for Conformity with Accounting Standards and APES 210 for Conformity with Auditing and Assurance Standards, outlining responsibilities for members involved in financial reporting.
4. Practice Reviews:
- § Members holding a Public Practice Certificate must demonstrate compliance with quality control standards through an annual signed assurance and practice reviews under CPA Australia’s Best Practice Program.
5. Accounting Firm Regulation - APES 320:
- § APES 320 (Quality Management for Firms that Provide Non-Assurance Services) provides guidance on establishing a Quality Management System (QMS) for public practices offering non-assurance services.
- § The QMS should ensure outputs are appropriate and provide confidence in compliance with professional, regulatory, and legal requirements.
6. Components of Quality Management System (QMS):
1) Governance and Leadership:
- § Objective: To promote an internal culture that recognizes quality as essential in performing engagements.
- § Description: This component focuses on the leadership and governance structure within a firm. It involves establishing mechanisms that ensure a commitment to quality runs throughout the organization. This includes fostering a culture that values adherence to professional and ethical standards, and leadership that actively promotes and demonstrates the importance of quality in all engagements.
2) Professional Standards (including Independence Considerations):
- § Objective: To provide reasonable confidence that the firm and its personnel comply with relevant ethical requirements as contained in the profession’s code of ethics.
- § Description: Ensuring compliance with professional standards is critical. This involves not only technical competence but also adherence to ethical principles. Independence considerations are especially emphasized, ensuring that the firm maintains independence in situations where assurance services are provided. It includes compliance with APES 110 Code of Ethics for Professional Accountants.
3) Acceptance and Continuance of Client Relationships and Specific Engagements:
- § Objective: To ensure that the firm will only undertake or continue with engagements where it has considered the integrity of the client, is competent to perform the engagement, and can comply with the ethical requirements.
- § Description: Before accepting or continuing client relationships and specific engagements, the firm should evaluate factors such as the integrity of the client, its competence to perform the engagement, and its ability to comply with ethical requirements. This involves risk assessment and due diligence in deciding whether to engage or continue with a client.
4) Resources:
- § Objective: To ensure the firm has sufficient human resources, technology resources, intellectual resources, and services providers to perform engagements up to the standard required by the firm’s quality management policies and procedures.
- § Description: Adequate resources are crucial for delivering quality services. This involves having the right mix of skilled professionals, appropriate technology, access to relevant intellectual resources, and any external services providers required for the engagement. It includes planning and allocation of resources based on the complexity and requirements of the engagements.
5) Engagement Performance:
- § Objective: To provide reasonable confidence that engagements are performed in accordance with professional standards, and regulatory and legal requirements.
- § Description: This component involves the actual execution of engagements. It includes ensuring that the work performed aligns with professional standards and meets all relevant legal and regulatory requirements. Attention is given to the execution of the engagement plan, gathering sufficient and appropriate evidence, and ensuring the accuracy and completeness of the work.
6) Information and Communication:
- § Objective: To ensure the firm has systems in place to ensure that there is a constant flow of communication about the need for quality management and feedback from firm personnel on how engagements have been conducted to enable continuous improvement.
- § Description: Effective communication is essential. This involves establishing systems for internal communication to convey the importance of maintaining quality standards. It also includes mechanisms for feedback from personnel regarding engagement processes, enabling continuous improvement in the firm's quality management.
7) Monitoring and Remediation:
- § Objective: To ensure ongoing evaluation of the firm’s system of quality control, including a periodic inspection of completed engagements and documentation. Remediation involves action taken when the findings from the monitoring process or other complaints have identified deficiencies.
- § Description: Regular monitoring and evaluation are crucial to maintaining a high-quality standard. This involves conducting periodic inspections of completed engagements and documentation. When deficiencies are identified through monitoring or complaints, a remediation process is implemented to address and rectify these issues, ensuring continuous improvement.
These components collectively form a comprehensive Quality Management System designed to uphold professional standards, ethics, and the overall quality of services provided by the accounting firm. The emphasis on leadership, compliance, risk assessment, resource management, performance, communication, and ongoing monitoring reflects the multifaceted nature of maintaining quality in professional services.
7. Recent Standards:
- § AUASB issued ASQM 1 for quality management in firms involved in audits or reviews, effective from December 15, 2022.
- § New Zealand’s External Reporting Board issued PES 3, also effective from December 15, 2022.
- § Both ASQM 1 and PES 3 are versions of ISQM 1, international standards issued by the IAASB.
8. Applicability of Standards:
- § Figure 1.3 illustrates which quality management standards apply based on the services offered by a practice.
The quality assurance process involves a combination of standard setting, conformity with standards, practice reviews, and the regulation of accounting firms to ensure the quality and integrity of accounting services.
PROFESSIONAL DISCIPLINE
1. Professional Discipline:
- § Professional and ethical standards aim to ensure the highest level of professionalism among accountants, maintaining credibility and public confidence.
- § Members of CPA Australia commit to upholding the reputation of the CPA designation through adherence to the Constitution, By-Laws, Code of Professional Conduct, and applicable regulations.
2. Complaints Process:
- § CPA Australia has a formal process to address complaints about members, ensuring that investigations and disciplinary actions are guided by principles of procedural fairness, confidentiality, independence, and the right to appeal.
3. Regulation of Member Conduct:
- § Articles 36–40 in the Constitution and Part 5 of the By-Laws outline the procedures for regulating member conduct.
- § A complaint can be initiated by any person, including members of the public, members of CPA Australia, or the General Manager Professional Conduct (GMPC).
- § Adverse events, as defined in the Constitution, may lead to disciplinary action.
- § The specific procedures for regulation are identified in:
- § Articles 36–40 in the Constitution of CPA Australia (effective 11 May 2022)
- § Part 5 of the By-Laws of CPA Australia (effective 1 October 2023).
4. Investigation and Disciplinary Procedures:
- § The GMPC reviews complaints, and if relevant, a file is opened for investigation.
- § A Professional Conduct Officer (PCO) is assigned to investigate the complaint and contact the member for an explanation.
- § After the investigation, a report is given to the GMPC, and if there is a case to answer, it is referred to the CEO.
- § The CEO determines whether there is a case to answer and, if yes, refers the complaint to the Disciplinary Tribunal or a One Person Tribunal (OPT).
5. Penalties and Appeals:
- § The Constitution specifies penalties that can be imposed, including forfeiture of membership, suspension, fines, admonishment, reprimand, and other penalties.
- § Findings and decisions of the Disciplinary Committee are published on CPA Australia's website.
- § Members and complainants are notified of the outcome.
6. Costs and Publication:
- § The Board may require a member to pay investigation costs and may publish the name of a member whose conduct has been regulated, along with details of the determination.
7. Fees-related Issues:
- The formal complaints process does not investigate issues related to fees, as fees charged by members are considered commercial matters. However, cases where members breach professional obligations are considered.
8. Mediation for Fee-related Concerns:
- § For concerns related to the size of fees, clients may consider contacting an organization that mediates commercial disputes, although there is usually a cost involved in using mediation services.
SUMMARY
1) Importance of Accounting Profession:
§ Integral to ensuring access to accurate and useful financial information for decision-making.
§ Decisions impact resource allocation with significant consequences for society.
2) Guiding Principles for Professional Accountants:
§ Understanding that information serving the public interest should guide professional conduct.
§ Emphasizing public interest over self-interest for maintaining integrity and authority.
3) Distinctive Features of a Profession:
§ Specific body of knowledge acquired through formal qualifications and continuous professional development.
§ Core ideal of service to the community.
§ Adherence to a code of ethics (e.g., APES 110), exercising professional judgment, and presence of a governing body (e.g., IFAC).
4) Autonomy and Self-Regulation:
§ Professions, including accounting, exhibit a high level of autonomy and self-regulation.
§ External regulation introduced due to shortcomings in some areas of the profession.
§ Co-regulatory approach involves self-regulation by peak bodies, legislation, and external regulators overseeing professional conduct.
5) Role of CPA Australia:
§ As a professional accountancy organization, CPA Australia has a constitution and disciplinary rules.
§ These define expectations for members, and public complaints may lead to disciplinary action.
§ Disciplinary actions may result in penalties to uphold professional standards and ethics.
KEY POINTS
1.1 Describe the nature and attributes of a profession.
§ Professions exist because of an implied social contract.
§ A profession generally has an overarching responsibility to operate in the public interest.
§ A profession has a code of ethics and other guidance that establishes acceptable norms for professionals practising in a specific discipline.
§ A profession is established and defined by a set of specific attributes.
1.2 Explain the co-regulatory processes of the accounting profession.
§ Society grants professions a high degree of autonomy and independence in return for acting in the
§ best interests of the society as a whole.
§ When professions fail to act in the best interests of society, society responds by imposing
§ external regulation.
§ A series of unexpected corporate failings in the early 2000s prompted regulators to increase external oversight of the accounting profession.
§ The mix of external regulation and self-regulation is known as ‘co-regulation’.
§ External regulation of the accounting profession in Australia includes legislation such as the Corporations Act, regulatory bodies such as ASIC and the ATO, and organisations such as the FRC, which oversees the AASB’s and AUASB’s work on setting accounting and auditing standards, respectively. These standards have the force of law.
§ Self-regulation of the accounting profession in Australia includes the professional accounting organisations (CPA Australia, Chartered Accountants Australia and New Zealand, and the Institute of Public Accountants), and their set of membership rules, ethical standards, educational requirements and disciplinary processes.
§ In a co-regulatory environment, government regulators and professional bodies interact to ensure that professionals working in specific areas follow the relevant ethical standards and laws.
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