Chapter 4

Professional Ethics
Fundamental Principles
Integrity

Objectivity

Professional Behaviour

Competence

Confidentiality
Risks
Undue dependence on an audit client
Associate firms
Family relations
Overdue fees
Risks to Independence and Objectivity
Self interest
Advocacy
Intimidation
Self review
familiarity
Safeguards to loss of objectivity
Quality control procedures

Audit committee

Audit rotation
Disclosure of information
Consent
Public duty
Legal right
professional
Obligatory disclosure situation
Involvement in offense
 Before appointment
Obtain references
Consult outgoing auditors
Check if existing resources are adequate
Check if professionally capable
After acceptance
Check if the outgoing auditors resignation was properly conducted
If the new auditors appointment is valid
Submit the letter of engagement
Advertising, publicity
Members

Should not see work in an unprofessional manner

Utilize advertising codes and standards
Not make comparisons
Not offer benefits
Must not mislead by quoting fees
Audit fees
Set according to criteria
Lowballing
Independence threat
Client screening factors
Management integrity
Ability to perform work
Relationships
Engagement fees
Sources for information
Accounts
Banks
Credit ratings
Previous auditors
Audit engagement letter
Guidance and application
Asses if preconditions for an audit are present
Check for consensus amongst auditor and client
Content of audit engagement letter
Objective and scope of audit
Auditors responsibilities
Management’s responsibilities
Content of reports
Additional caluses
Elaboration of scope
Unavoidable risk of not detecting misstatements
Planning
Written representation
Agreement to inform auditors of facts that may affect financial statements.
Involvement of other external and internal auditors.
Any further agreements.