Code of Ethics 2

Occurs when a firm or a member of the assurance team could benefit from a financial interest in, or other self-interest conflict with, an assurance client.

•  Self-interest threat

• . Advocacy threat

  
  

• Self-review threat

• Familiarity threat

Occurs when any product or judgment of a previous assurance engagement or nonassurance engagement needs to be re-evaluated in reaching conclusions on the assurance engagement or when a member of the assurance team was previously a director or officer of the assurance client, or was an employee in a position to exert direct and significant influence over the subject matter of the assurance engagement.

• Self-interest threat

• Advocacy threat

  
  

•  Self-review threat

• Familiarity threat

  
  

Occurs when a firm, or a member of the assurance team, promotes, or may be perceived to promote, an assurance client’s position or opinion to the point that objectivity may, or may be perceived to be, compromised. Such may be the case if a firm or a member of the assurance team were to subordinate their judgment to that of the client.

• Self-interest threat

•  Advocacy threat

  
  

•  Self-review threat

• Familiarity threat

  
  

Occurs when, by virtue of a close relationship with an assurance client, its directors, officers or employees, a firm or a member of the assurance team becomes too sympathetic to the client’s interests.

• Self-interest threat

• Advocacy threat

  
  

•  Self-review threat

•  Familiarity threat

  
  

 Intimidation threat

• Is not a threat to independence.

  
  

• Occurs when a member of the assurance team may be deterred from acting objectively and exercising professional skepticism by threats, actual or perceived, from the directors, officers or employees of an assurance clien

• Occurs when, by virtue of a close relationship with an assurance client, its directors, officers or employees, a firm or a member of the assurance team becomes too sympathetic to the client’s interests.

  
  

• Occurs when a firm, or a member of the assurance team, promotes, or may be perceived to promote, an assurance client’s position or opinion to the point that objectivity may, or may be perceived to be, compromised.

  
  

The safeguards available to eliminate the threats or reduce them to an acceptable level include

•  Safeguards created by the profession,

  legislation or regulation

  
  

• Safeguards within the assurance clien

• Safeguards within the firm’s own systems and

  procedures

  
  

Safeguards created by the profession, legislation or regulation, include the following, except 

•  Educational, training and experience requirements for entry into the profession.

  
  

• Continuing education requirements.

  
  

• . Legislation governing the independence requirements of the firm.

  
  

• Policies and procedures that emphasize the assurance client’s commitment to fair

  financial reporting.

  
  

 Safeguards within the assurance client, include the following, except

• Professional standards and monitoring and disciplinary processes.

  
  

• The assurance client has competent employees to make managerial decisions.

• Internal procedures that ensure objective choices in commissioning non-assurance engagements.

  
  

• A corporate governance structure, such as an audit committee, that provides appropriate oversight and communications regarding a firm’s services.

  
  

Professional accountants may encounter problems in identifying unethical behavior or in resolving an ethical conflict. When faced with significant ethical issues, professional accountants should do the following, except

• Follow the established policies of the employing organization to seek a resolution of such conflict.

  
  

• Review the conflict problem with the immediate superior if the organization’s policies do not resolve the ethical conflict.

  
  

• If the problem is not resolved with the immediate superior and the professional

  accountant determines to go to the next higher managerial level, the immediate superior need not be notified of the decision.

  
  

• Seek counseling and advice on a confidential basis with an independent advisor or the applicable professional accountancy body or regulatory body to obtain an understanding of possible courses of action.

  
  

Which of the following is incorrect regarding professional competence?

• Professional accountants may portray themselves as having expertise or experience they do not possess.

  
  

•  Professional competence may be divided into two separate phases.

•  The attainment of professional competence requires initially a high standard of general education.

  
  

• The maintenance of professional competence requires a continuing awareness of

  development in the accountancy profession.