Conduct of a person
- Reason for threat?
- Breach to fundamental principle and why?
- Any assumptions on the individual? What supports the assumption?
- Something is not recorded, FS not prepared in terms of IFRS (s29)
- Information may be false and misleading
- s76 of Co Act
- Contravention of Co Act further brings into question his adherence to his professional competence and due care to fulfil role as director
General principles on CPC
- When referring to CPC mention the threats always and be specific on heading contravened
- Deposit qualifies as a loan if received before engagement (apply specific section of CPC)
- CA comply with CPC and not bring the profession to disrepute
- CFO, has to adhere to sound governance principles of King IV and ethical values of leadership
- CA(SA) and needs to comply with SAICA CPC
- Providing incomparable services s90(2) Co Act
- Asking for a favour is an inducement
- Question if it is consistent with integrity
- Issues on salaries, review of work and staff costs ISQC1/ISA220
- NOCLAR
- Mention that there is no indication that appropriate actions have been implemented to reduce threats to an acceptable level
- JSE listed Co is a PIE in terms of SAICA code
- SAICA CPC requires before accepting new client relationships threats to compliance with fundamental principle need to be identified and evaluated for significant appropriate safeguards to be applied
- Mention that non compliance with CPA (or whatever legislation)
- s76, s77,s22
- Is a CA (SA) RA and thus obliged to comply with both the SAICA and IRBA CPC.
- does not appear to be aware of ISA 450
- ISA 265
- donation provided to his daughter gives rise to an Inducement in terms of the CPC definition.
- actions may negatively affect the reputation of the auditing profession, i.e.. bring the profession into disrepute .
- may be found guilty in terms of SAICA / IRBA Rules for Improper conduct, due to the above
Answering a CPC question
- Identify issue
- Threat
- Fundamental principle
- Significance
- Safeguard
- See if you can link the scenario to specific part of CPC
- Threat could be considered not at an acceptable level
- A professional accountant quoting a reduction in fee or a lower fee, due to this arrangement, in itself is not unethical, unless the threat cannot be reduced/eliminated
Concerns on conduct of partner and client
- ISA 220
-Any things that need to be further investigated
-Application of everything that you see in he scenario and other relevant assumptions that the issue may lead to
-Audit partner is required to report this issue to those Charged with
Governance in terms of ISA 260 - CPC
- Define the fundamental principle linking to definition
-Include the Companies Act
Conclusion:
-They breached the SAICA CPC in a number of instances as
disclosed above, and are therefore guilty of improper conduct in terms of the Rules.
-ISA 220 on Quality Control, may be inadequate as well because of the evidence presented
Steps to take regarding the audit partners behavior (Lack of professional conduct)
-Follow their formal and documented internal control procedures for
ethical issues which may arise, in order to apply consistent steps to other reported incidences in the past / future.
-Disciplinary process
-ISA 220 (Training)
-Mitigation: Quality control reviewer will need to be placed on her audits.
-Previous client audit files to be thoroughly reviewed
-Consider reporting to SAICA and to
-Obtain the assistance of a labour lawyer
-Consider communicating with TCWG
Safeguards: CPC
- s90 Co Act
- A firm policy
- Comprehensive review of a persons work
- Notify TCWG
- Disposal of xxx
- Discussion with xx
- Independence: Introduce changes to audit strategy and plan
- No safeguard
- Have a lawyer
- Limiting the service of xxx
