Unit 1 Summary PDF

Unit 1 – Values and Attributes of Accounting Professional 1. Role of Professional 2.Importance of Ethics for 3. Reasons for upholding values required of accounting professional (Cont’d) 4. Threats to compliance of professional p...

Unit 1 – Values and Attributes of Accounting Professional 1. Role of Professional 2.Importance of Ethics for 3. Reasons for upholding values required of accounting professional (Cont’d) 4. Threats to compliance of professional principles Accountant in Business Accounting 1.1 Financial -Because shareholders, ISCA (EP)100 - Accounting Professionals to comply with the following fundamental principles: Threats may be created by relationships and circumstances Reporting potential investors and (a) Integrity Principle of Integrity imposes obligation on accounting professionals -*to be straightforward and honest in all professional and business (a)Self-interest threats Provide useful other users refer to relationships; also implies fair dealing and truthfulness. Those caused by financial or other interest that inappropriately financial information financial statements to *not to knowingly be associated with reports, returns, communications or other information where he/she believes to influence accounting professional’s judgement or behaviour -contain materially false or misleading statement Examples: (about organisation) make informed Accounting professionals -contain statements or information furnished recklessly to internal and decisions -Omits/obscures information required to be included when omission and obscurity would be misleading * having significant/close relationship with potential bidders who external users for An accounting professional will need to take steps to disassociate from such known information and take steps to disassociate from that offer gifts to secure contracts info. If not, he/she has breached the integrity principle. * entering into employment negotiations with competing making appropriate -protect public and gain company of the accountant professional’s current employer (b) Objectivity and timely decisions their confidence. This principle imposes an obligation on accounting professional NOT TO COMPROMISE professional and biz judgement due to: * who discover significant accounting error made by supervisor and assessing (i)Bias – one’s judgement clouded by preconceived or irrational arguments who put up recommendation to promote him/her organisation’s -induces(lead) members (ii)Conflict of Interest-one’s judgement affected by allegiance owing to both parties in a situation (iii)Undue influence of others-one’s judgement swayed by others (b)Advocacy threats management to behaviour that Threats that accounting professional will promote employer’s reflects credibility to An accounting professional should avoid taking up professional activity or service if circumstance or relationship biases or unduly influences position to an extent his/her objectivity is compromised one’s judgement with respect to the service Examples: 1.1 Assurance profession by enforcing Accounting professional Through proper conduct and (c)Professional Competence and Due Care *promoting company’s new promotion packages This principle imposes an obligation on accounting professionals to: professional reprimand misconduct. * goes on social media to promote his/her company’s products (i)maintain professional knowledge and skill at level required to ensure clients or employers receive competent professional service, and, despite negative feedback circulated by customers accountant (in public ____________________ (ii) act diligently according to applicable technical and professional standards such as exercising sound judgement when performing/providing professional activities or services practice)expression’s (c)Familiarity threats Professional Competence of opinion or 3. Reasons for upholding Threats due to long/close relationship with client/employer, (i)attainment of professional competence values required of accounting professional becomes too sympathetic to their conclusion, and acts (ii)maintenance of professional competence – continuing awareness and understanding of relevant, professional, business developments. interests/too accepting of their work accounting professional Continuous professional development develops and maintain capabilities to perform competently within professional environment to enhance Examples: Diligence – responsibility to act in accordance with requirements of assignment, carefully , thoroughly and on timely basis confidence of Accounting professional (d) Confidentiality intended users Accounting roles with 2 *overseeing tendering process is family relative to one of the Accounting professionals are not to: bidders responsibilities: (i)disclose confidential information acquired from professional and business relationships without proper and specific authority undless the *accepting gifts or preferential treatment from suppliers Safeguard the is legal or professional right or duty to disclose *following instructions to pay supplier before receiving goods (ii)use confidential information acquired from professional and business relationships to their personal advantage of advantage of 3rd integrity of the financial parties (d) Intimidation threats information; Confidential information includes information from prospective employer or accounting client. Threats that deter accounting professional from acting objectively Ensure proper Accounting professionals because of actual or perceived pressure, including exercising of *must maintain confidentiality within the company he/she works in and social environment. reporting in compliance undue influence over accounting professional *must be alert to possible inadvertent disclosure of confidential information especially to close business associate or close/immediate Examples: with relevant financial family member *Accounting professional threatened with dismissal for not reporting standards *continue to maintain confidentiality even after end of employer/accounting client relationships. complying with direction of management’s malpractices *must not disclose confidential information acquired from professional/business relationship of previous employment) to new *those hourly paid - pressured to take short cuts in accounting to employer/accounting client cut down working hours/reduce fees Disclosure of confidential information by law under the following circumstances: *feeling pressured to agree with (non-accounting trained) (i)Permitted by law and is authorised by accounting client/employer manager’s judgement due to his longer work experience (ii)Required by law e.g. documents/other evidence in the course of legal proceedings, disclosure to appropriate public authorities or infringements of the law Safeguards against Threats Professional duty to disclose confidential information Actions or other measures that may eliminate threats or reduce/ (i)to comply with professional body quality review minimise them to acceptable level. (ii)respond to inquiry/investigation by regulatory body Safeguards can be created by accounting profession, legislation, (iii)protect professional interests of professional personnel in legal proceedings regulation such as: (iv)comply with technical and professional standards/ethical requirements a)education, training , experience requirements for entry into (e) Professional Behaviour profession Accounting professionals must b)continuing professional development requirements *comply with relevant laws and regulations and avoid any conduct he/she knows or should know that may discredit/adversely affect c)corporate governance regulations accounting profession reputation d)professional standards *be honest, truthful, not make exaggerated claims or unsubstantiated comparisons to the work of others. e)professional/regulatory monitoring and disciplinary procedures