Safeguards to identify or deter unethical behaviour
Created by profession/regulation or legislation:
- Education/training/ entry experience
- CPD requirements
- Corporate governance regulations
- Profesional standards/monitoring and disciplinary procedures
- External reviews
In the work environment :
- effective complaints system
- duty to report breaches
Ethical conflict resolution
Consider : relevant facts, parties, ethical issues involved, relevant fundamental principles, established internal procedures , alternative courses of action
Consult with others :
Appropriate persons within the firm
Board of directors
Professional body or legal advisors
If no possible further action resign from engagement team or firm all together
Disclosure of information
When to disclose :
- When permitted by law and authorised by client/ employer
- required by law
- professional duty to disclose but no prohibited by law
Factors to consider:
- Harm to interested parties
- all relevant info known and substantiated
- type of communication expected and to whom addressed
- legal and regulatory obligations
Conflict of interest examples
Threat to objectivity
Examples :
- Client specific interests conflict with those of firm
- financial involvement with the client (loan)
- acting for husband and wife in divorce
- acting for a company and it’s directors in their personal capacity
- acting for both a partnership and it’s partners in their personal capacity
- acting for two competing businesses
- staff in secondment with hmrc
Conflict of interest what to do
If threats > insignificant consider and apply safeguards
-Notify all relevant parties of the conflict
-obtain consent to act
-consider the following ;
~Use separate teams
~Procedures to prevent access to info
~Clear guidelines for members of team on ~security and confidentiality
~use of actual and perceived confidentiality agreements signed by employees and partners of the firm
~regular review of application of safeguards by senior individual not involved with relevant client engagements
If threat cannot be eliminated or reduced to ACCEPTABLE LEVEL it is not acceptable to accept the engagement
New client procedures
Before accepting new clients
Determine whether acceptance would create threats to fundamental principles
Ensure engagement team have competencies necessary to properly carry out the engagement
Contractual relationship governed by letter of engagement for every contractual relationship (eg both husband and wife in divorce ) containing :
- Scope of clients and accountants responsibilities
- authority to disclose HMRC errors
