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3 - 1 Copyright 2003 Pearson Education Canada Inc. CHAPTER 3 Professio nal Ethics
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3 - 1Copyright 2003 Pearson Education Canada Inc.
CHAPTER 3Professional
Ethics
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professional ethics
personal morals= ?
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professional ethics
personal morals=
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function of
?
professional ethics
personal morals=
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function of: - nature of the profession- collective morals- regulatory & legal constraints
professional ethics
personal morals=
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function of: - nature of the profession- collective morals- regulatory & legal constraints
functionof:
?
professional ethics
personal morals=
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function of: - nature of the profession- collective morals- regulatory & legal constraints
function of:- religious faith- family’s values- morals of peers- experiences- personality: selfish/altruistic
professional ethics
personal morals=
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personal
professional ethics
The profession hopes that individualThe profession hopes that individualpractitioners will absorb the profession’spractitioners will absorb the profession’s ethics into their personal morals.ethics into their personal morals.
morals
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Basic ethics principlesBasic ethics principlesare universal, regardless of religiousaffiliation, culture, background, etc.
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Basic ethics principlesBasic ethics principlesEXAMPLE: Our class finds itself on a desert island with no hope of escape. What societal rules do we need?
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Basic ethics principlesBasic ethics principles- be honest- have integrity- keep your promises- be faithful and loyal- be fair- care for others- respect others- be a responsible citizen- pursue excellence- be accountable
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Why do people Why do people obeyobey rules? rules?
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Why do people Why do people obeyobey rules? rules?
- personal integrity “I said I would obey the rules,and I will.”
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Why do people Why do people obeyobey rules? rules?
- personal integrity“I said I would obey the rules, And I will.”
- utilitarianism “If we all obey the rules, we willall benefit.”
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Why do people Why do people obeyobey rules? rules?
- personal integrity“I said I would obey the rules, and I will.”
- utilitarianism “If we all obey the rules, we willall benefit.”
- fear of consequences“If I break the rules, I may be punished.”
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Why do people Why do people fail to obeyfail to obey rules? rules?
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- lack of personal integrity
Why do people Why do people fail to obeyfail to obey rules? rules?
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- lack of personal integrity- selfishness
Why do people Why do people fail to obeyfail to obey rules? rules?
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- lack of personal integrity- selfishness- rationalization
“everyone does it” “it’s not illegal” “I won’t get caught”
Why do people Why do people fail to obeyfail to obey rules? rules?
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What do you do when confronted What do you do when confronted with an ethical dilemma?with an ethical dilemma?
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What do you do when confronted What do you do when confronted with an ethical dilemma?with an ethical dilemma?
- obtain relevant facts
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What do you do when confronted What do you do when confronted with an ethical dilemma?with an ethical dilemma?
- obtain relevant facts- identify ethical issues
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What do you do when confronted What do you do when confronted with an ethics dilemma?with an ethics dilemma?
- obtain relevant facts- identify ethical issues- determine stakeholders
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What do you do when confronted What do you do when confronted with an ethics dilemma?with an ethics dilemma?
- obtain relevant facts- identify ethical issues- determine stakeholders- identify alternatives
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What do you do when confronted What do you do when confronted with an ethics dilemma?with an ethics dilemma?
- obtain relevant facts- identify ethical issues- determine stakeholders- identify alternatives- identify consequences of alternatives on stakeholders
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What do you do when confronted What do you do when confronted with an ethics dilemma?with an ethics dilemma?
- obtain relevant facts- identify ethical issues- determine stakeholders- identify alternatives- identify consequences of alternatives on stakeholders- decide
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Rules of Professional ConductRules of Professional Conduct
principlesideal standards of ethical con-duct (unenforceable)
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Rules of Professional ConductRules of Professional Conduct
principles
rules ofconduct
enforceable minimum standards
ideal standards of ethical con-duct (unenforceable)
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Rules of Professional ConductRules of Professional Conduct
principles
rules ofconduct
interpretationsissued by provincial institutes(not technically enforceable)
ideal standards of ethical con-duct (unenforceable)
enforceable minimum standards
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Rules of Professional Rules of Professional ConductConduct
IndependenceIndependenceA member in public accounting mustbe independent in the performanceof certain professional services (audits,reviews, other attestation functions;not tax returns, compilations, manage-ment consulting).
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Facets of IndependenceFacets of Independence1. Financial independence - not having a financial interest in the client
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Facets of IndependenceFacets of Independence1. Financial independence
2. Independence of mental attitude - professional skepticism
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1. Financial independence
2. Independence of mental attitude
3. Investigative independence - fee is adequate, staffing is appropriate
- access to all evidence
Facets of IndependenceFacets of Independence
To obtain sufficient appropriate audit
evidence
To reach proper opinion
To reach proper opinion
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Facets of IndependenceFacets of Independence1. Financial independence
2. Independence of mental attitude
3. Investigative independence
4. Reporting independence
Ensures report is acted on
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Confidential Client InformationConfidential Client Information
A member in public practice shall notdisclose any confidential client (oremployer) information without thespecific consent of the client (oremployer). Confidential / inside infor-mation can’t be used to benefit themember.
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Confidential Client InformationConfidential Client InformationA member in public practice shall notdisclose any confidential client informa-tion without the specific consent of the client.
What are the What are the exceptionsexceptions??
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A member in public practice shall notdisclose any confidential client informa-tion without the specific consent of the client...
What are the What are the exceptionsexceptions??- subpoena or summons (court)
Confidential Client InformationConfidential Client Information
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A member in public practice shall notdisclose any confidential client informa-tion without the specific consent of the client...
What are the What are the exceptionsexceptions??- subpoena or summons (court)- disciplinary proceedings
Confidential Client InformationConfidential Client Information
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A member in public practice shall notdisclose any confidential client informa-tion without the specific consent of the client...
What are the What are the exceptionsexceptions??- subpoena or summons (court)- disciplinary hearings- practice inspections
Confidential Client InformationConfidential Client Information
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Integrity and Due CareIntegrity and Due Care
In the performance of any professionalservice, a member shall maintain integrity (reputation for honesty) and use due care (application of appropriatelevel of care and skill for comparabletrained professional).
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CompetenceCompetence
A member shall maintain his / herprofessional competence. Undertakeonly those professional services that themember or the member’s firm can rea-sonably expect to be completed withprofessional competence.
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Adherence to GAAS & GAAPAdherence to GAAS & GAAP
- A member shall comply with the pro- fessional standards in the CICA Handbook.
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- A member shall comply with the pro- fessional standards in the CICA Handbook. - A member shall not be associated with false or misleading financial infor- mation.
Adherence to GAAS & GAAPAdherence to GAAS & GAAP
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Advertising & SolicitationAdvertising & Solicitation
- Solicitation of another’s client is prohibited.
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Advertising & SolicitationAdvertising & Solicitation
- Solicitation of another’s client is prohibited.
- Advertising which is not in good taste is prohibited.
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Breaches of Rules of Breaches of Rules of Professional ConductProfessional Conduct
A member who is aware of a breach by another member must report the breach tothe disciplinary committee after advising themember of the intent to make a report.
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Contingent FeesContingent Fees
A member in public practice shall not chargea fee contingent on the outcome of an audit,review or compilation.
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Contingent FeesContingent Fees
For what typesof engagements may
contingent fees bepermitted?
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Contingent FeesContingent Fees
business and consulting services
For what typesof engagements may
contingent fees bepermitted?
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Communication withCommunication withPredecessor AuditorPredecessor Auditor
Any circumstanceswhich should prevent
successorfrom accepting?
A member shall communicate with thepredecessor auditor prior to acceptingan appointment.
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If public accountants comply with all If public accountants comply with all of the Rules of Conduct, are they of the Rules of Conduct, are they
assured that they have not violated assured that they have not violated anyany accounting ethics rules? accounting ethics rules?
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If public accountants comply with all If public accountants comply with all of the Rules of Conduct, are they of the Rules of Conduct, are they
assured that they have not violated assured that they have not violated anyany accounting ethics rules? accounting ethics rules?
YES!
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Who must comply with the Who must comply with the Rules of Professional Rules of Professional
Conduct?Conduct?all
accountants?
all publicaccountants?
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Not all rules are applicable formembers not in public practice.
allmembers
Who must comply with the Who must comply with the Rules of Professional Rules of Professional
Conduct?Conduct?
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What happens if a member What happens if a member violates the Rules of violates the Rules of
Professional Conduct?Professional Conduct?
ROPC
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- someone may know of the violation and report it to the Institute
VIOLATION!
What happens if a member What happens if a member violates the Rules of violates the Rules of
Professional Conduct?Professional Conduct?
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- someone may know of the violation and report it to the Institute
- the Institute may investigate and may prescribe discipline; possible sanctions include required CPE, publication, fines, suspension, or expulsion
What happens if a member What happens if a member violates the Rules of violates the Rules of
Professional Conduct?Professional Conduct?
