Wednesday, 29 May 2013

Professional Ethics For Auditors (1)

Auditors give assurance to varied stakeholders.  Auditors as professional have to maintain the level of confidence the users of the auditor’s report have in them.  In acting in the  
interest of the public, auditors observe and comply with some high level principles.  Most professional associations have embodied the principles into code of ethics for their members.  The principles include integrity, objectivity, confidentiality, due care, skills and competence and professional behavior.


1.   Principles of Due Care, Skill and Competence

The principle of professional competence and due care imposes the following obligations on all auditors:

a)    To maintain professional knowledge and skill at the level required to ensure that clients receive competent professional service; and

b)    To act diligently in accordance with applicable technical and professional standards when providing professional services.

 Competent professional service requires the exercise of sound judgment in applying professional knowledge and skill in the performance of such service. Professional competence may be divided into two separate phases:

a)    Attainment of professional competence; and

b)    Maintenance of professional competence.

The maintenance of professional competence requires a continuing awareness and an understanding of relevant technical, professional and business developments. Continuing professional development enables an auditor to develop and maintain the capabilities to perform competently within the professional environment.

Diligence encompasses the responsibility to act in accordance with the requirements of an assignment, carefully, thoroughly and on a timely basis.

 An auditor shall take reasonable steps to ensure that those working under the professional accountant’s authority in a professional capacity have appropriate training and supervision.

Where appropriate, an auditor shall make clients, employers or other users of the auditor’s professional services aware of the limitations inherent in the services.


2.   Principle of Integrity

The principle of integrity imposes an obligation on all auditors to be straightforward and honest in all professional and business relationships. Integrity also implies fair dealing and truthfulness.

An auditor shall not knowingly be associated with reports, returns, communications or other information where the auditor believes that the information:

a)    Contains a materially false or misleading statement;

b)    Contains statements or information furnished recklessly; or

c)    Omits or obscures information required to be included where such omission or obscurity would be misleading.

When an auditor becomes aware that the auditor has been associated with such information, the auditor shall take steps to be disassociated from that information.

The auditor should show respect to all persons he comes in contact with during the performances of his duties.

3.   Principle of Confidentiality

The principle of confidentiality imposes an obligation on all auditors to refrain from:

a)    Disclosing outside confidential information acquired as a result of professional and business relationships without proper and specific authority or unless there is a legal or professional right or duty to disclose; and

b)    Using confidential information acquired as a result of professional and business relationships to their personal advantage or the advantage of third parties.

An auditor shall maintain confidentiality, including in a social environment, being alert to the possibility of inadvertent disclosure, particularly to a close business associate or a close or immediate family member.

An auditor shall maintain confidentiality of information disclosed by a prospective client.

An auditor shall maintain confidentiality of information within the firm.

An auditor shall take reasonable steps to ensure that staff under the auditor’s control and persons from whom advice and assistance is obtained respect the auditor’s duty of confidentiality.

The need to comply with the principle of confidentiality continues even after the end of relationships between an auditor and a client or employer. When an auditor acquires a new client, the auditor is entitled to use prior experience. The auditor shall not, however, use or disclose any confidential information either acquired or received as a result of a professional or business relationship.

The following are circumstances where auditors are or may be required to disclose confidential information or when such disclosure may be appropriate:

a.    Disclosure is permitted by law and is authorized by the client;

b.    Disclosure is required by law, for example:

                              i.        Production of documents or other provision of evidence in the course of legal proceedings; or

                            ii.        Disclosure to the appropriate public authorities of infringements of the law that come to light; and

c.    There is a professional duty or right to disclose, when not prohibited by law:

                              i.        To comply with the quality review of a member body or professional body;

                            ii.        To respond to an inquiry or investigation by a member body or regulatory body;

                           iii.        To protect the professional interests of an auditor in legal proceedings; or

                           iv.        To comply with technical standards and ethics requirements.
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