Professional Competence and Due Care Quiz
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Questions and Answers

What is a reason that may cause a professional firm to resign from an audit engagement?

  • Wanting to work on a more challenging audit
  • Being too busy to continue the engagement
  • Not liking the company's financial figures
  • Unresolved conflicts of interest with the client (correct)

    • What are the TWO conditions necessary before an auditor can adopt a systems-based approach to an audit assignment?

  • Inadequate internal controls and outdated financial reporting systems
  • Lack of IT infrastructure and minimal financial data
  • Well-documented systems and reliable internal controls (correct)
  • Highly skilled IT staff and complex accounting software

    • What is the ethical position in the ICAN code on another auditor taking up the appointment after resignation of the current auditor?

  • It is mandatory to take up such appointments for career advancement
  • It is recommended to take up such appointments for professional growth
  • It is irrelevant to the ICAN code
  • It is discouraged to take up such appointments (correct)

    • What are Computer-Assisted Audit Techniques (CAATs) known for?

    <p>Automating audit procedures using software</p> Signup and view all the answers

    What is one of the conditions under which a chartered accountant can disclose information obtained in the course of professional work?

    <p>Obtaining consent from the person or entity to which the information relates</p> Signup and view all the answers

    What is the meaning of 'integrity' according to the ICAN code of ethics for members?

    <p>Fair dealing and truthfulness</p> Signup and view all the answers

    Under what circumstance should a chartered accountant maintain confidentiality in a social environment?

    <p>Information disclosed by a prospective client or employer</p> Signup and view all the answers

    What is the duty of the auditing firm regarding disclosure of information to Sobona Limited?

    <p>Should not disclose unless specific conditions are fulfilled</p> Signup and view all the answers

    What is the duty of members in relation to professional competence and due care?

    <p>To attain and maintain professional knowledge and skill at the required level</p> Signup and view all the answers

    What is the primary responsibility of members regarding confidentiality?

    <p>To respect the confidentiality of information acquired and not disclose it to third parties without authority</p> Signup and view all the answers

    What could affect the independence and integrity of the auditor?

    <p>Fees and pricing</p> Signup and view all the answers

    What conduct should professional accountants avoid to maintain professional behavior?

    <p>Any conduct that might discredit the profession</p> Signup and view all the answers

    Study Notes

    Audit Engagement Resignation

    • Professional firms may resign from an audit engagement due to significant issues such as lack of cooperation from management or findings that raise doubts about the integrity of the financial statements.

    Conditions for Systems-Based Approach

    • A comprehensive understanding of the client's internal control environment is necessary.
    • Sufficient evidence must exist indicating that the systems are reliable and effective.

    Ethical Position on Auditor Appointment

    • The ICAN code prohibits another auditor from taking up the appointment immediately after the resignation of the current auditor unless proper procedures and ethical standards are followed.

    Computer-Assisted Audit Techniques (CAATs)

    • CAATs are utilized for enhancing the efficiency and effectiveness of audits and are known for their ability to process large volumes of data quickly.

    Conditions for Disclosure of Information

    • A chartered accountant can disclose information if it is required by law or there is a clear and valid reason protecting the public interest.

    Meaning of 'Integrity' in ICAN Code

    • Integrity involves being straightforward, honest in professional and business relationships, and not engaging in misleading or deceitful behavior.

    Confidentiality in Social Environments

    • Chartered accountants must maintain confidentiality in social situations by not disclosing sensitive client information to unauthorized individuals.

    Duty of Auditing Firm

    • Auditing firms have a duty to ensure that information related to Sobona Limited is disclosed only with proper authority or legal obligation.

    Professional Competence and Due Care

    • Members must maintain a high level of professional competence and apply due care in the performance of their duties, ensuring thoroughness in their work.

    Responsibility Regarding Confidentiality

    • Members have the primary responsibility to protect confidential information, ensuring it is not disclosed unless permitted or legally required.

    Factors Affecting Independence and Integrity

    • Situations such as financial interests in a client, personal relationships, or receiving gifts from clients can undermine the auditor's independence and integrity.

    Conduct to Avoid for Professional Behavior

    • Professional accountants should avoid any actions that compromise professionalism, such as engaging in corrupt practices, conflicts of interest, or misleading statements.

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    Description

    Test your understanding of professional competence, due care, and confidentiality in the context of professional services. This quiz covers the duty to maintain knowledge, act diligently based on standards, and respect confidentiality of acquired information.

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