Topic: Professional Ethics and Code of Conduct for Auditors

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AA – Nov 2014 – L2 – Q5 – Professional Ethics and Code of Conduct for Auditors

Explain threats to auditor independence and provide examples of each.

Question

The ICAN Professional Code of Conduct and Guide for Members gives a list of threats to auditors’ independence, which may impair integrity, objectivity, or the good reputation of the profession.

Required:

Explain the following threats and give TWO examples each of circumstances that may lead to the threats:

a. Self-Interest (3 Marks)

b. Self-Review (3 Marks)

c. Advocacy (3 Marks)

d. Familiarity (3 Marks)

e. Intimidation (3 Marks)

Answer

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Tags: Advocacy, Auditor Independence, Familiarity, Intimidation, Self-Interest, Self-Review
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors

AA – May 2021 – L2 – Q6 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Explanation of auditor independence threats, including fees, financial interest, contingent fees, and personal relationships.

Question

Wakaso Nigeria Limited has experienced serious labour turnover which has affected the business of the company in the last twelve months. The most frustrating issue was the resignation of a well-tested Financial Controller of the company close to year-end. Wakaso management is noted for timely financial reporting and rendering of tax returns due to the efficiency and effectiveness of the Financial Controller who was also involved in the preparation of tax computations. The company has been finding it difficult to quickly recruit a new Financial Controller that will match the technical ability of the former accountant. The Managing Director of the company has invited the company’s external auditors to a meeting, intimating them of the plan to employ their services to complete the write-up of the books of accounts and management account pending when they employ a good chartered accountant to handle the financial operations of the company.

The company’s management, in order to ensure timely reporting, has also informed the auditors that to save time and meet cost of operations, the firm’s staff will be accommodated in a five-star hotel with a mouth-watering offer of payment in lieu of feeding as recommended by the audit partner. In addition, the previous year’s audit fee will be doubled and an additional twenty percent payment made if the management accounts and audit work could be completed within three weeks.

The partner of the firm has rejected the offers on the grounds of possible threat to independence. The Managing Director complained to you, as his brother, lamenting that accountants are not good businessmen and uncooperative.

Required:

Discuss the following:

a. Meaning of threats to independence (2 Marks)
b. In relation to independence of auditors:
i. Fees and pricing (4 Marks)
ii. Financial interest (4 Marks)
iii. Contingent fees (2 Marks)
iv. Family and personal relationship (4 Marks)
c. The reasons why the preparation of accounting records and management accounts constitutes a threat to the independence of the auditors. (4 Marks)

Answer

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Tags: Auditor Independence, Ethics, Family Relationships, Fees, Financial Interest
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: MAY 2021

AA – May 2017 – L2 – SA – Q3 – Professional Ethics and Code of Conduct for Auditors

Identification of threats to ethical principles and safeguards for accountants.

Question

There are a variety of circumstances that could give rise to the threats of self-interest, advocacy, familiarity, and intimidation against the five fundamental principles of integrity, objectivity, personal competence and due care, confidentiality, and professional behaviour as enunciated in the Code of Ethics. There are, however, safeguards created to help the Professional Accountant in such circumstances.

You are required to:

(a) List FIVE safeguards created by the profession and legislation. (5 Marks)
(b) Identify and explain FIVE safeguards that could be created by firms of Chartered Accountants. (10 Marks)
(c) List FIVE possible safeguards that an individual Chartered Accountant could apply. (5 Marks)

Answer

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Tags: Code of Ethics, Familiarity Threat, Professional Conduct, Safeguards, Self-Interest Threat
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: MAY 2017

AA – Nov 2015 – L2 – Q7 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discussing ethical considerations in providing non-audit services to an audit client and fundamental principles of professional ethics.

Question

Ade, Bala, Chris and Co. are the auditors to Victory Ventures Limited, a chemical manufacturing company. The firm has been carrying out statutory audits for this client for several years. Recently, the company asked the firm to carry out tax planning and compliance advisory services and also perform financial reporting valuation services for the company.

Required:
a. Discuss ethical issues the firm will need to take into consideration in accepting to carry out the new assignments for the client. (5 Marks)
b. Describe the FIVE fundamental ethical principles according to ICAN Professional Code of Conduct and Guide for Members and IFAC Code of Ethics. (5 Marks)
c. Describe the differences between rules-based and principles-based approaches to professional ethics. (5 Marks)

Answer

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Tags: Auditor Independence, Ethical Issues, Non-Audit Services, Professional Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2015

AA – Nov 2015 – L2 – Q5b – Professional Ethics and Code of Conduct for Auditors

Explaining factors a chartered accountant must consider in resolving ethical conflicts in auditing.

Question

In evaluating compliance with the fundamental principles, a chartered accountant may be required to resolve a conflict in the application of fundamental principles. You are required to state and explain what factors he must take into consideration in his evaluation.

Answer

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Tags: Auditors' responsibilities, Ethical Conflicts, Professional Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2015

AA – Nov 2015 – L2 – Q5a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discussing the fundamental principle of duty of confidentiality in audit and assurance engagements.

Question

Briefly discuss the fundamental principle of Duty of Confidentiality.

Answer

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Tags: Auditors' responsibilities, Confidentiality, Professional Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2015

AA – Nov 2016 – L2 – Q2a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

This question addresses the ethical issues auditors face when accepting clients and engagements, focusing on independence and professional conduct.

Question

Audit practice around the world is generally a business, and its objective is to make profit. However, this does not mean that the practice should automatically accept every audit engagement that is offered to it to maximise profit. Circumstances may arise where it is appropriate to decline the offer of an audit engagement for either commercial or ethical reasons.

Required:
a. Discuss the ethical issues to be considered by an independent auditor in the following matters:
i. Client Acceptance
ii. Engagement Acceptance
(5 Marks)

Answer

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Tags: Auditor's Liability, Client Acceptance, Engagement Acceptance, Ethical Standards, Independence, Professional Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2016

AA – May 2022 – L2 – SB – Q2 – Professional Ethics and Code of Conduct for Auditors

Discuss the fundamental principles of ICAN Code of Conduct for auditors and under what circumstances auditors may disclose information to third parties.

Question

There are five fundamental principles of ICAN code of conduct for members which auditors must comply with while carrying out their duties as auditors.

a. Explain the requirements for the application of ethics by ICAN members. (5 Marks)
b. Explain the fundamental principles of ICAN code of ethics. (10 Marks)
c. Under what circumstances may an auditor be required to disclose information to a third party? (5 Marks)

Answer

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Tags: Auditor Ethics, Ethical Standards, ICAN Code of Conduct, Professional Responsibilities
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: MAY 2022

AA – Nov 2020 – L2 – Q6 – Professional Ethics and Code of Conduct for Auditors

Discuss the ICAN code on acting professionally and in the public interest and differentiate between trade and profession.

Question

The ICAN Professional Code of Conduct and Guide for Members requires every member or student of the Institute to always “act professionally” and in “the public interest” in the discharge of their responsibilities.

Required:
a. Explain “act professionally” in relation to the ICAN code. (1 Mark)
b. Discuss the behavioral attributes that will enable an ICAN student to act professionally. (6 Marks)
c. Discuss briefly “acting in the public interest”. (7 Marks)
d. Differentiate between a trade and a profession. (6 Marks)

Answer

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Tags: Professionalism, Public Interest, Trade and Profession
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2020

AA – Nov 2020 – L2 – Q2 – Introduction to Auditing

Explain key concepts of auditing, including the objective of audit, independence, materiality, and the roles of management and auditors.

Question

In a bid to increase the interest of students in auditing, your audit firm has instituted a program in conjunction with universities in Nigeria, whereby the universities provide the firm with an opportunity to speak to students about the audit profession and what it means to be an auditor with a view to getting them interested in pursuing a career in audit when they graduate. During the program, audit personnel interact one-on-one with the students. As an audit senior in the firm, you have been asked to attend one of such programs and present a paper.

Required:
Explain the following in relation to the contents of your paper:
a. The definition and objective of an audit (2 Marks)
b. The concepts of accountability, stewardship, and agency (3 Marks)
c. Independence of the auditor (1 Mark)
d. True and fair view (2 Marks)
e. Materiality (2 Marks)
f. The rights and duties of an external auditor (6 Marks)
g. The responsibilities of management (4 Marks)

Answer

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Tags: Audit Definition, Audit Objective
Level: Level 2

Topic: Introduction to Auditing, Professional Ethics and Code of Conduct for Auditors
Series: NOV 2020

AA – May 2018 – L2 – Q4 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Focuses on ethical issues relating to independence and potential threats when auditors take management roles in audit clients.

Question

Joe Adams was the engagement partner to Maikai Airlines Limited from 2012 to 2014. He retired from the firm of the Chartered Accountants and intends to join Maikai Airlines Limited as Finance Director. It is the policy of the firm to pay all partners in full when they disengage.

Required: a. Identify and explain FOUR ethical matters worthy of consideration as Joe Adams joins Maikai Airlines Limited. (8 Marks) b. Discuss the THREE threats that could arise should Joe Adams join Maikai Airlines Limited. (6 Marks) c. Explain THREE matters specified by the Code of Ethics as safeguards in relation to this matter. (6 Marks)

Answer

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Tags: Auditor Independence, Ethical Issues, Safeguards, Threats to Independence
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: MAY 2018

AA – Nov 2021 – L2 – Q4 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discuss the implications of supplying bank transaction information and the principles guiding accountants.

Question

Your firm audits Sabona Limited, a privately owned company, which is a customer of Oldie Limited, another privately owned client company. The managing director of Oldie Limited has asked your firm to supply Sabona Limited bank transactions for the last six months as they are concerned about their ability to honour their financial obligation.

Required:
a. State whether or not you would supply this information and the reasons for your actions. (5 Marks)
b. Explain briefly FIVE fundamental principles issued by the Institute of Chartered Accountants of Nigeria (ICAN) as guides to accountants. (10 Marks)
c. Describe FIVE matters that could affect the independence and integrity of the auditor. (5 Marks)

Answer

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Tags: Auditor Independence, Bank Transactions, Ethical Principles, ICAN Guidelines
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2021

AA – May 2019 – L2 – Q6 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Examination of weaknesses in rules-based ethics, fundamental principles of principles-based ethics, and accountants' duty of care and public interest.

Question

Rules-based code of ethics contains specific rules about how accountants should act in specific situations. Principles-based code of ethics specifies general principles of ethical behaviour and requires professional accountants to act in accordance with the principles. Both are issued by professional accountancy bodies to regulate the conduct of accountants in the course of performing their duties. All accountants who are members of a professional body, such as the Institute of Chartered Accountants of Nigeria, are required to comply with the regulations of that professional body which apply to both external and internal auditors. The reason for the wide reach of ethical guidelines is that the accountancy profession accepts that its members have a responsibility to act in the public interest while discharging their duties.

You are required to:

a. State THREE of the weaknesses of rules-based code of ethics. (3 Marks)

b. Identify FIVE key fundamental principles in the principles-based code. (5 Marks)

c. Explain the phrase “Duty of skill and care.” (2 Marks)

d. When are accountants said to be “acting in the public interest”? (5 Marks)

Answer

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Tags: Duty of Care, Fundamental Principles, Principles-Based Ethics, Public Interest, Rules-Based Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: MAY 2019

AA – Nov 2018 – L2 – Q2 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Identify and explain conflict of interest and specific safeguards when dealing with competing clients.

Question

Your firm has been the financial consultants to West Africa Dairies Company Plc (WADCO) for three years. A competitor within the industry has now approached your firm to become their financial consultant.

Required:
a. Identify and explain the conflict of interest that may arise if your firm takes up the competitor’s engagement.
(6 Marks)

b. Explain the specific safeguards that your firm could apply if you are to accept the offer.
(14 Marks)

Answer

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Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2018

SCS – Apr 2022 – L3 – Q7 – Professional practice and codes of ethics

Discuss key governance issues based on Ghana’s Code of Best Practices considering the Board Chairman’s intentions.

Question

In reference to Ghana’s Code of Best Practices in Corporate Governance, discuss FOUR (4) key issues that could determine how well or badly HPC is governed, taking into consideration the intention and business relationship of the Board Chairman. (10 marks)

Answer

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Tags: Best Practices, Board of Directors, Conflict of Interest, Corporate Governance, Ethical Governance
Level: Level 3

Topic: Professional Ethics and Code of Conduct for Auditors
Series: APR 2022

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

Question

Mr. Ajibade, a businessman based in the South West region of Nigeria intends to start a new company. The new company, when formed, will focus solely on the production of face masks and alcohol-based hand sanitisers which are needed to prevent the spread of the novel corona virus. This has been incorporated into the draft Memorandum of Association to be submitted to the Corporate Affairs Commission (CAC).

Mr. Ajibade has heard of section 377 of Companies and Allied Matters Act (CAMA) Cap C20 LFN 2004, which offers exemption from an audit if a company qualifies as a small company as per section 351 of the Act. He thinks that when he starts a small company, he will therefore be exempted from statutory audit and so save cost.

Mr. Ajibade has a growth plan for his prospective company. He has also heard that if the company is to grow bigger in the future, he will require more funding in the form of loans from banks and other financial institutions. The banks will require audited financial statements as a prerequisite to granting his company loan facilities. He is therefore, curious to know more about the importance of audited financial statements.
He has approached you for advice.

Required:
a. What qualifies a company as a small company according to CAMA.
(6 Marks)
b. The benefits and limitations of an audit.
(9 Marks)
c. The eligibility for qualification as external auditor.
(6 Marks)
d. The scope of a statutory audit.
(4 Marks)
e. According to ISA 300: Planning an Audit of Financial Statements, the objective of the auditor is to plan the audit work so that the audit will be performed in an effective manner.
Required:
Explain the benefits of adequate planning of the audit.
(5 Marks)
f. Explain THREE risk assessment procedures required by ISA 315: Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.
(10 Marks)

Answer

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Tags: Audit Benefits, Audit Exemptions, Audit Requirements, Professional Ethics, Risk Assessment Procedures, Small Companies
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors

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AA – Nov 2014 – L2 – Q5 – Professional Ethics and Code of Conduct for Auditors

Explain threats to auditor independence and provide examples of each.

You're reporting an error for "AA – Nov 2014 – L2 – Q5 – Professional Ethics and Code of Conduct for Auditors"

AA – May 2021 – L2 – Q6 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Explanation of auditor independence threats, including fees, financial interest, contingent fees, and personal relationships.

You're reporting an error for "AA – May 2021 – L2 – Q6 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

AA – May 2017 – L2 – SA – Q3 – Professional Ethics and Code of Conduct for Auditors

Identification of threats to ethical principles and safeguards for accountants.

You're reporting an error for "AA – May 2017 – L2 – SA – Q3 – Professional Ethics and Code of Conduct for Auditors"

AA – Nov 2015 – L2 – Q7 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discussing ethical considerations in providing non-audit services to an audit client and fundamental principles of professional ethics.

You're reporting an error for "AA – Nov 2015 – L2 – Q7 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

AA – Nov 2015 – L2 – Q5b – Professional Ethics and Code of Conduct for Auditors

Explaining factors a chartered accountant must consider in resolving ethical conflicts in auditing.

You're reporting an error for "AA – Nov 2015 – L2 – Q5b – Professional Ethics and Code of Conduct for Auditors"

AA – Nov 2015 – L2 – Q5a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discussing the fundamental principle of duty of confidentiality in audit and assurance engagements.

You're reporting an error for "AA – Nov 2015 – L2 – Q5a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

AA – Nov 2016 – L2 – Q2a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

This question addresses the ethical issues auditors face when accepting clients and engagements, focusing on independence and professional conduct.

You're reporting an error for "AA – Nov 2016 – L2 – Q2a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

AA – May 2022 – L2 – SB – Q2 – Professional Ethics and Code of Conduct for Auditors

Discuss the fundamental principles of ICAN Code of Conduct for auditors and under what circumstances auditors may disclose information to third parties.

You're reporting an error for "AA – May 2022 – L2 – SB – Q2 – Professional Ethics and Code of Conduct for Auditors"

AA – Nov 2020 – L2 – Q6 – Professional Ethics and Code of Conduct for Auditors

Discuss the ICAN code on acting professionally and in the public interest and differentiate between trade and profession.

You're reporting an error for "AA – Nov 2020 – L2 – Q6 – Professional Ethics and Code of Conduct for Auditors"

AA – Nov 2020 – L2 – Q2 – Introduction to Auditing

Explain key concepts of auditing, including the objective of audit, independence, materiality, and the roles of management and auditors.

You're reporting an error for "AA – Nov 2020 – L2 – Q2 – Introduction to Auditing"

AA – May 2018 – L2 – Q4 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Focuses on ethical issues relating to independence and potential threats when auditors take management roles in audit clients.

You're reporting an error for "AA – May 2018 – L2 – Q4 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

AA – Nov 2021 – L2 – Q4 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discuss the implications of supplying bank transaction information and the principles guiding accountants.

You're reporting an error for "AA – Nov 2021 – L2 – Q4 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

AA – May 2019 – L2 – Q6 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Examination of weaknesses in rules-based ethics, fundamental principles of principles-based ethics, and accountants' duty of care and public interest.

You're reporting an error for "AA – May 2019 – L2 – Q6 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

AA – Nov 2018 – L2 – Q2 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Identify and explain conflict of interest and specific safeguards when dealing with competing clients.

You're reporting an error for "AA – Nov 2018 – L2 – Q2 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

SCS – Apr 2022 – L3 – Q7 – Professional practice and codes of ethics

Discuss key governance issues based on Ghana’s Code of Best Practices considering the Board Chairman’s intentions.

You're reporting an error for "SCS – Apr 2022 – L3 – Q7 – Professional practice and codes of ethics"

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

You're reporting an error for "AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification"

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