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Modern Auditing: Assurance Services and the Integrity of Financial Reporting, 8 th Edition

Modern Auditing: Assurance Services and the Integrity of Financial Reporting, 8 th Edition. William C. Boynton California Polytechnic State University at San Luis Obispo Raymond N. Johnson Portland State University. Chapter 3 – Professional Ethics. Chapter 3 Overview. Ethics and Morality.

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Modern Auditing: Assurance Services and the Integrity of Financial Reporting, 8 th Edition

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  1. Modern Auditing: Assurance Services and the Integrity of Financial Reporting, 8th Edition William C. Boynton California Polytechnic State University at San Luis Obispo Raymond N. Johnson Portland State University Chapter 3 – Professional Ethics

  2. Chapter 3 Overview

  3. Ethics and Morality • General Ethics • Ethical Dilemma • Ethical Absolutists • Ethical Relativists • Professional Ethics • Commitment by profession • Ethical Principles and Rules of Conduct

  4. AICPA Professional Ethics Division • Standard Setting • Ethics Enforcement • Technical Inquiry Services

  5. Composition of The Code • Two Sections • Principles • Rules of Conduct • Pronouncements • Interpretations of the Rules of Conduct • Ethical Rulings

  6. Ethical Principles • Responsibilities • The Public Interest • Integrity • Objectivity and Independence • Due Care • Scope and Nature of Services

  7. Study Break • Which two of the following elements are member-adopted sections of the Code: • Principles • Ethical Rulings • Interpretations • Rules of Conduct A. Principles and D. Rules of Conduct

  8. Study Break 2. Which ethical principle states that members should honor the public trust and demonstrate a commitment to professionalism? • Integrity • Public Interest • Due Care • Responsibilities B. Public Interest

  9. Rule 101 - Independence

  10. Engagement-Based Approach • Covered Members • Prohibited Activities • Immediate Family Members • Close Relatives • Other Professionals and Their Immediate Family Members

  11. Employment with an Attest Client • Employee becomes employed by client • Public Companies • Private Companies • Employee seeks employment with client

  12. Other Independence Issues • Nonattest Services • Private Companies • Litigation • Unpaid Fees

  13. AICPA Rules of Conduct

  14. AICPA Rules of Conduct (cont.)

  15. State Boards and PCAOB • State Accountancy Statutes and Laws • Audit Firms of Public Companies

  16. Enforcement of the Rules • Joint Ethics Enforcement Procedures (JEEP) • Joint Trial Board Procedures • Admonishment • Suspension • Expulsion • Automatic Disciplinary Provisions

  17. Study Break 3. Which of the following is subject to enforcement under the Rules of Conduct? • Independence in Fact • Independence in Appearance B. Independence in Appearance

  18. Study Break 4. Under the joint trial board procedures, which of the following is not a possible disciplinary action that could be taken: • Admonishment • Suspension for five years • Expulsion • Suspension for two years or less B. Suspension for five years

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