Auditor’s 3 Areas of Responsibility to Society
- Moral Responsibilities
- Professional Responsibilities
- Legal Responsibilities
Professional Responsibilities (Ethics)
Rules and principles for the proper conduct of an auditor in his/her professional work
Ethics
Branch of philosophy which is the systematic study of reflective choice of the standards of right and wrong
Ethical problem
Situation when you must make a clear choice among alternatives
Critical Thinking
Process of identifying the primary accounting, auditing and ethical objectives and principles to be relied upon in a particular situation with all the principles being logically consistent with the objectives of financial reporting
2 Viewpoints of Ethical Behaviour
- Produces the greatest good
- Conforms to rules and principles
Reflective Choice Steps
- Recognize a decision problem
- Collect evidence
- Think about rules of behaviour
- Consider probable outcomes
- Analyze the situaiton
- Take action
Professional Judgement Steps
- Identifying crucial issue
- Gathering information on all significant assertions
- Identifying possible alternative courses of actions
- Evaluating alternative courses of actions
- Deciding on the best course of action
Monistic Theories
Assume that universal principles apply regardless of the specific facts
Pluralistic Theories
Assume there are no universal principles and that the best approach is to use the principles that are most relevant to a particular case
Imperative Principle - Kant
Universal principles must always be followed regardless of consequence
Principle of Utilitarianism
Ultimate criterion of an ethical decision is the balance of good over evil consequences produced by an action, greatest good for greatest numbers is all that matters
CPA Handbook 5 Fundamental Principles
- Professional behaviour
- Integrity and Due Care
- Professional competence
- Confidentiality
- Objectivity
Integrity
Duty to be honest and conscientious in performing professional services
Objectivity
Hold themselves free of any influence, interest, or relationship that impairs the member’s professional judgement
Independence
Objectivity in the case of an assurance engagement
