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AUD 610: Audit and Assurance Services
STATUTORY AND PROFESSIONAL RESPONSIBILITIES
Prepared by :
Azmiah Abdul Razak
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AUD 610: Audit and Assurance Services
Auditors’ responsibilities are guided by legislations and professional by-laws...
The main documents supporting auditors in carrying their fiduciary duties in Malaysia are:
Companies Act 1965; and
MIA By-Laws (on professional ethics, conduct and practice) of the Malaysian Institute of Accountants.
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AUD 610: Audit and Assurance Services
Key provisions in Companies Act, 1965 guiding auditors to perform their duties.
In the Companies Act, 1965, several provisions relating to auditors’ duties and responsibilities are stated, namely:
• Qualification (Sec.8 and 9)
• Appointment, removal and resignation (Sec.172)
• Duties (Sec.174 (1) – (3))
• Power or rights of auditors (Sec.174 (4) – (9))
• Remuneration (Sec.172 (16))
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AUD 610: Audit and Assurance Services
QUALIFICATION – Sec.8 & 9, Companies Act 1965
• Under Sec.8 & 9, companies are required to appoint auditor that is qualified, having necessary independent, integrity and objectivity.
• Sec.8 states that companies have to appoint an approved auditor.
• What qualifies approved auditor?
Approved by the MoF to act as auditor.
Good character and competent to perform duties.
A professional accountancy qualification with adequate practical training and a MIA member (CA).
Audit firm that is registered with CCM - can be in the form of sole-prop or partnerships. 4
AUD 610: Audit and Assurance Services
QUALIFICATION – Sec.8 & 9, Companies Act 1965
Subsequently, auditor must remain independent, integrity and objectivity in performing their duties. Hence, sec.9 (1) prohibits auditors to be appointed, if:
• He is not an approved auditor. • Indebted to the company for more than RM2,500 • He is an officer of the company (who works in the
company within the preceeding 12 months). • A shareholder or spouse being shareholder of a
corporation. • He maintains the register of members or the
register of holders of debentures of the company. (Please check related sections in Companies Act)
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AUD 610: Audit and Assurance Services
APPOINTMENT, REMOVAL & RESIGNATION Sec.172, Companies Act 1965
Appointment:
• Sec.172(1): Power of Directors to appoint auditor before 1st general meeting, otherwise members entitled to appoint in general meeting.
• Sec.172(2): Company shall appoint auditor at each AGM. Term of office starts from appointment at present AGM until conclusion of next AGM. Company must at every AGM appoint and re-appoint auditor.
• Sec.172(3): Power to Directors to appoint to fill casual vacancy (termination of business, winding up), exception to resignation/ dismissal.
• Sec.172 (10): Power to CCM to appoint auditor after dismissal/ removal if company does not appoint new auditor on application in writing of member of the company.
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AUD 610: Audit and Assurance Services
APPOINTMENT, REMOVAL & RESIGNATION Sec.172, Companies Act 1965
Dismissal :
Sec.172(4): To be done at general meeting of which special notice of ordinary resolution to remove auditor is issued.
Sec.172(5): On receipt of special notice by company, it must send a copy of special notice to present auditor, CCM. Auditor may within 7 days of receiving special notice make representation in writing to company request representation be sent by company to all members entitled to receive notice of general meeting.
Sec.172 (8 &10): Company shall inform in writing of removal of auditor to the CCM. The power to CCM to appoint auditor after the dismissal/removal of auditor if the company does not appoint another auditor.
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AUD 610: Audit and Assurance Services
APPOINTMENT, REMOVAL & RESIGNATION Sec.172, Companies Act 1965
Resignation :
• Sec.172 (14): Auditor may resign if he is not the sole auditor of company, at general meeting of company.
• Sec.172 (15): Auditor shall give notice of resignation to Directors. The Directors will arrange for new appointment and resignation only effective on appointment of another auditor.
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AUD 610: Audit and Assurance Services
APPOINTMENT, REMOVAL & RESIGNATION Sec.172, Companies Act 1965
172A: Where an auditor has made written representations to the company pursuant to subsection 172(5) or if an auditor gives notice to the directors of the company of his desire to resign as auditor of the company pursuant to subsection 172(15), he shall within seven days of the submission of the written representations or the submission of his notice of resignation, submit a copy of the written representations or his written explanation of his resignation, to the Registrar and, to the Stock Exchange where the company is a company whose shares or debentures are listed on the official list of a Stock Exchange as defined in the Securities Industry Act 1983.”
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AUD 610: Audit and Assurance Services
DUTIES & POWERS OF AUDITORS Sec.174, Companies Act 1965
Duties :
• Sec.174 (1): To report to the members on the accounts and the company’s accounting and other records relating to accounts in general meeting.
• Sec.174 (2): To express opinion in his report:
True and fair view of accounts of the company and the consolidated accounts.
Books, records, register properly kept Disclose names of subsidiaries he is not auditor Duty to report defects, irregularities in accounts
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AUD 610: Audit and Assurance Services
DUTIES & POWERS OF AUDITORS Sec.174, Companies Act 1965
Duties :
• To ensure all relevant information and explanation obtained
• Ensure proper accounting records are kept • Ensure returns received from branch adequate • Ensure consolidation procedures, methods used
by holding, subsidiary appropriate • Attend general meeting, to receive all notice
relating general meeting which concern auditor • Report particulars of deficiency, failure and
shortcoming.
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AUD 610: Audit and Assurance Services
DUTIES & POWERS OF AUDITORS Sec.174, Companies Act 1965
Power or Rights of Auditors : Sec.174 (4) – (9)
• To access books and records at all reasonable times,
• To gain necessary information and explanation when performing his duties,
• To attend general meeting, to receive all notice relating general meeting which concern auditor,
• To make written representation when company dismiss him as auditor,
• To address shareholders at AGM,
• To attach Auditor’s Report to Annual Report, to be read in general meeting.
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AUD 610: Audit and Assurance Services
For the purpose of subsection (8A) : (a) a company is presumed, unless the contrary is
established, to be controlled by a public company if the public company is entitled to exercise or control the exercise of not less than fifteen per centum of votes attached to the voting shares of the company; and (b) “a serious offence involving fraud or dishonesty” means an offence that is punishable by imprisonment for a term that is not less than two years or the value of the assets derived or likely to be derived or any, loss suffered by the company, member or debenture holder from the commission of such an offence exceeds two hundred and fifty thousand ringgit and includes offences under sections 364, 364A, 366 and 368.”.
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AUD 610: Audit and Assurance Services
DUTIES & POWERS OF AUDITORS Sec.174, Companies Act 1965
Section 174(8A) – Amendment 2007 :
If an auditor in the course of performance of his duties as an auditor of a public company or a company controlled by a public company, is of the opinion that a serious offence involving fraud or dishonesty is being or has been committed against the company or this Act by officers of the company, he shall forthwith report the matter in writing to the Registrar.
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AUD 610: Audit and Assurance Services
DUTIES & POWERS OF AUDITORS Sec.174, Companies Act 1965
Section 172 (16) : Remunerations The fees and expenses of an auditor of a company:
• If auditor appointed in general meeting – shall be fixed by the company at general meeting, or if so authorise by members, by the Directors.
• If auditor appointed by Directors or by CCM – shall be fixed
by the Directors or CCM respectively.
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AUD 610: Audit and Assurance Services
• The Revised By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants are issued by the Council of the Malaysian Institute of Accountants come into effect on 1 January 2011
• All professional bodies impose a code of conduct on their members.
• This code of ethics provides a set of principles and rules that offer guidance to members.
• Ethics – set of moral principles, values or acceptable behaviour
• In Malaysia, MIA issued the By-Laws on professional conduct and ethics (called “MIA By-Law [on Professional Conduct and Ethics]”)
Provide standard of conduct in daily professional life
Important for gaining public confidence in auditors’ services
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MIA By-Laws
AUD 610: Audit and Assurance Services
MIA By-Laws
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Part I By Laws on
Professional Ethics
Part II By Laws on Professional
Conduct & Practice
(A) General Application
[Sec.100 – 150]
(B) Professional Accountants
on Public Practice [Sec. 200 - 291]
(C) Professional Accountants
in Business [Sec.300 - 350]
(A) All Professional
Accountants [Sec.400 – 420]
(B) Members in Public
Practice [Sec.500 – 550]
AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART A – GENERAL APPLICATION
• 100 – Fundamental Principles & Conceptual Framework • 100.1 Fundamental Principles • 100.2 Conceptual Framework Approach • 100.8 Threats and Safeguards • 100.13 Ethical Conflict
• 110 – Integrity • 120 – Objectivity • 130 – Professional Competence & Due Care • 140 – Confidentiality • 150 – Professional Behaviour
150.1 Professional Behaviour 150.2 Advertising, Marketing and Promotions
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AUD 610: Audit and Assurance Services
MIA By-Law Part A - General Application Fundamental Principles & Conceptual Framework
• All Prof. Accountant (accountant) shall comply with fundamental principles (integrity, objectivity, professional competence & due care, confidentiality & prof. behavior) when performing their duties.
• In certain circumstances, there will be exposure of specific threats in the nature of engagement/work assignment which require different mechanism of safeguards. By-Law Conceptual Framework requires accountant to identify, evaluate & address threats to comply with fundamental principles. This conceptual framework approach will assist accountant to comply their ethical requirement in meeting their responsibilities to act in public interest.
• Threats can occur in broad range of circumstances & relationships. Whether the threats can be compromise or not, it gives effect to accountant fundamental principles. Safeguards are actions/other measures that may eliminate/reduce threats to an acceptable level.
• Ethical conflict resolution arise when a accountant may be required to resolve a conflict in complying with the fundamental principles.
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AUD 610: Audit and Assurance Services
MIA By-Law (Professional Ethics)
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INTEGRITY Sec.110
Straight forward/Honest
in all prof. & business
relationship
Fair dealings/ Truthfulness
Avoid prepare/attest/associate
with fraud or misleading information/
documentation
AUD 610: Audit and Assurance Services
MIA By-Law (Professional Ethics)
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OBJECTIVITY Sec.120
No bias
Avoid conflict of
interest Not to
compromise with professional or
business judgments due to undue influence
of others.
AUD 610: Audit and Assurance Services
MIA By-Law (Professional Ethics)
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PROFESSIONAL COMPETENCE & DUE CARE
Sec.130
Maintain prof. knowledge &
skills
Attain & maintain
competency Act diligently according to
applicable prof. & technical standards
Due care & diligent at
all time
Appropriate training &
supervision to subordinates
AUD 610: Audit and Assurance Services
MIA By-Law (Professional Ethics)
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CONFIDENTIALITY Sec.140
Not to disclose info to 3rd parties
without proper & specific authority
Continues confidentiality until
after end of business relationship
Not use info for self, personal or
3rd parties Disclosure allow IF:
- Permitted by law - Authorise by clients - Prof.duty/right to disclose
AUD 610: Audit and Assurance Services
MIA By-Law (Professional Ethics)
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PROFESSIONAL BEHAVIOUR
Sec.150
Comply with relevant
laws & rules
Prof. dignified & good taste
Avoid any action that
discredits the profession
Professional behaviour
Advertising, marketing, promotions
Relevant & applicable legislations
Honest & truthful offer/
services
AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
• 200 – Threats & Safeguards • 210 – Professional Appointment
Client Acceptance Engagement Acceptance Change of Professional
Appointment • 220 – Conflicts of Interest • 230 – Second Opinions • 240 – Fees & Remuneration
Contingent Fees Referrals Commission Tenders
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• 250 – Marketing Public Practice
Services
Advertising
Publicity
Solicitation
• 260 – Gifts & Hospitality
• 270 – Custody of Client Assets
• 280 – Objectivity All Services
• 290 – Independence (Audit &
Review Engagement)
Indep. in Mind
Indep. in Appearance
AUD 610: Audit and Assurance Services
200 – It describe how conceptual framework in Part A applies to certain situations to accountant in public practice. They shall not engage in any business, occupation or activity that will weaken integrity, objectivity or good reputation of the profession.
Threats & Safeguards
• Threats can occur in broad range of circumstances & relationships. Whether the threats can be compromise or not, it gives effect to accountant fundamental principles.
• Threats fall into one or more categories : self-interest, self-review, advocacy, familiarity and intimidation.
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PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
AUD 610: Audit and Assurance Services
THREATS • Self-interest threat – the threat that a financial or other interest will
inappropriately influence the accountant judgement or behaviour; (E.g: Having a financial interest in a client’s business)
• Self-review threat – the threat that an accountant will not appropriately evaluate the results of a previous judgment made or service performed by the accountant, or by another individual within the firm or employing organization, on which the accountant will rely when forming a judgement as part of providing a current service; (E.g: Auditing financial statements prepared by the firm)
• Advocacy threat – the threat that an accountant will promote a client’s or employer’s position to the point that the accountant objectivity is compromised; (E.g: Dealing/being a promoter of shares or other securities in a client)
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PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
AUD 610: Audit and Assurance Services
THREATS
• Familiarity threat – the threat that due to a long or close relationship with a client or employer, a accountant will be too sympathetic to their interests or too accepting of their work; (E.g: An audit team member having family at the client)
• Intimidation threat – the threat that a accountant will be deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the professional accountant; (E.g: Threats of replacing application accounting principles due to disagreement)
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PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
AUD 610: Audit and Assurance Services
SAFEGUARDS
• Safeguards are actions/other measures that may eliminate or reduce threats to an acceptable level.
• Two categories of safeguard with examples: Safeguards created by the profession, legislation or
regulation Safeguards within work environment
Firm-wide safeguards Engagement specific safeguards
• Safeguards within clients’ system & procedures : accountant can also rely on safeguards which client has implemented depending nature of work engagement.
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PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
AUD 610: Audit and Assurance Services
Safeguards are actions/other measures that may eliminate or reduce threats to an acceptable level.
• Two categories of safeguard with examples:
Safeguards created by the profession, legislation or regulation Educational training and experience requirements for entry into the profession
Continuing professional development requirements
Corporate governance regulations
Professional standards
Professional or regulatory monitoring and disciplinary procedures
External review by a legally empowered third party of the reports, returns, communication or information produced by a professional accountant
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PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
AUD 610: Audit and Assurance Services
SAFEGUARDS
Safeguards within the work environment - firm wide Leadership of the firm that stress important of
fundamental principles & public interest
Policies & procedures –implement/monitor quality control for audit engagement
Documented policies – identify threats & safeguards
Using different partners/audit team in reporting lines
Timely communication within partners & prof. staff – appropriate education & training for audit policies/procedures/compliance
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PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
AUD 610: Audit and Assurance Services
SAFEGUARDS
Safeguards within the work environment – engagement specific Involving an additional professional accountant to review the work
done or otherwise advise as necessary
Consulting an independent third party, such as a committee of independent directors, a professional regulatory body or another professional accountant (MIA, AG, MOF, SC, BNM, etc)
Rotating senior personnel
Discussing ethical issues with those in charge of client governance
Disclosing to those charged with governance the nature of services provided and extent of fees charged
Involving another firm to perform or re-perform part of the engagement
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PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
AUD 610: Audit and Assurance Services
SAFEGUARDS within clients’ system & procedures:
Accountant can also rely on safeguards which client has implemented depending nature of work engagement, eg:
• The client requires persons other than management to ratify or approve the appointment of a firm to perform an engagement.
• The client has competent employees with experience and seniority to make managerial decisions.
• The client has implemented internal procedures that ensure objective choices in commissioning non-assurance engagements.
• The client has a corporate governance structure that provides appropriate oversight and communications regarding the firm’s services.
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PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
210 – PROFESSIONAL APPOINTMENT
• Client Acceptance
Understand client business-avoid illegal issues
Check potential threats before accepting new client - integrity
Evaluate significance threats & apply safeguards.
Impossible to eliminate/reduce threats – decline engagement
Review acceptance decision for recurring clients.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
210 – PROFESSIONAL APPOINTMENT • Engagement Acceptance Accept services that accountant competent to
perform – professional behaviour & due care
Evaluate threats & apply safeguards, if any. Eliminate/reduce threats to an acceptable level.
Determine the reliability on work of expert if require assistance from them based on the expertise, reputation, professionalism, resources & ethical standards.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
210 – PROFESSIONAL APPOINTMENT • Change of Professional Appointment
If require replacement – communicate with existing accountant: Acquire facts about client business. Obtain reasons why they refuse to engage/continue/accept the
engagement Evaluate significant threats & apply safeguards
If existing accountant is bound for confidentiality – write in to potential client for permission to discuss with existing accountant. If permission is refused – propose accountant shall decline the
appointment. If permission is obtained - the existing accountant shall comply with
relevant regulations to communicate with propose accountant - honest
If existing accountant refuse to communicate, propose accountant need to obtain information for possible threats from third party inquiries such as senior management or those charged of client’s governance. 36
AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
220 – CONFLICTS OF INTEREST
• Accountant should take reasonable steps to identify circumstances which could lead to conflicts of interest – threats to objectivity & confidentiality.
• Eg. Conflicts of interest:
Compete directly with client’s business
JV or personal arrangement with client’s competitor
Client’s business in conflict/dispute in transactions
• If conflict of interest poses more than one threat & fundamental principles & cannot be eliminate to an acceptable level, accountant shall not accept engagement or resign.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
230 – SECOND OPINIONS • Situations where an accountant is asked to provide a second opinion (on the
application of accounting, auditing, reporting or other standards or principles) to specific circumstances/transactions by/on behalf of a company/entity that is not an existing client.
• May create threats if second opinion is not based on the same level of facts that were made available to the existing accountant /is based on inadequate evidence.
• The existence and significance of any threat will depend on the circumstances of the request and all the other available facts and assumptions relevant to the expression of a professional judgment. Accountant shall evaluate significant threats when asked to provide such opinion. Apply safeguards when necessary to eliminate them or reduce them to an acceptable level.
• Seek client permission to contact the existing accountant - describe limitations of opinion to client and provide existing accountant with copy of opinion.
• If the client does not permit communication with existing accountant - to consider whether all circumstances takes into account.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
240 – FEES & REMUNERATION
• Fees charged for assurance engagement should be a fair to reflect amount of work performed base on:
Skill and knowledge required for the work involved.
Level of training and experience on the assignment
Time frame of work.
Work of responsibility and urgency the work.
• No member shall mislead his client by charging unrealistically low fee resulting compromised (jeopardize) professional standards/quality
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
240 – FEES & REMUNERATION Contingent fees
• Not allow for assurance services, but allow for certain types of non-assurance services.
Referral fees or Commissions
• Accepting and paying referral fees or commissions may give rise to self interest threats to objectivity and professional competence & due care.
• Accountants not allowed to accept or pay referral fees or commissions unless acceptable safeguards can be put in place.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
250 – MARKETING PUBLIC PRACTICE SERVICE Advertising, Publicity and Solicitation (APS) • Advertising is the communication to the public of facts about
a professional account with a view of procuring profession business.
• Publicity is the communication to the public of facts about a professional accountant.
• Advertising and Publicity use of various media such as magazines, radio to communicate favourable information about the good and service of the firm.
• Solicitation can be defined as various means that accounting firms use to engage new clients other than accepting new clients that approach the firm. Examples include taking potential client to lunch to explain firm’s services.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
250 – MARKETING PUBLIC PRACTICE SERVICE Advertising or Marketing Services
• Threats may exist when the accountant obtain new work through advertising/ marketing if the promotion is inconsistent with principle. He shall be honest and truthful. If he is in doubt whether a proposed form of advertising/marketing is appropriate, request guidance from the Institute.
Tenders
• Threats may exist if the accountant enter in a public advertisement/tender submission for offering professional services. Accountant shall not respond to advertisements to tender for professional work unless he has established safeguards to eliminate the threats or reduce them to an acceptable level.
• If the appointment may need replacement of another accountant, state in the submission/tender before acceptance the need to contact existing accountant so that inquiries be made as to whether there are professional reasons why the appointment should not be accepted. If the submission/tender is successful, contact the existing accountant in accordance with provisions in Sec.210.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
260 – GIFTS & HOSPITALITY • If gifts are accepted - Create self interest threat to
objectivity • If gifts are made in public - Create intimidation threat • Gifts can be accepted if made in the normal course of
business without specific intent to influence accountant’s decision making.
270 – CUSTODY OF CLIENT ASSETS
• Keep separately from personal or firm’s assets. • Use assets for purpose they are intended. • Be ready to account for the assets, income, dividends
generated. • Comply with all relevant laws and regulations.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
290 – INDEPENDENCE (Audit & Review Engagement) • Professional independence: Attitude of mind characterized by integrity and
objective approach to professional work. Accountant should be & be seen to be free from any conflict of interest.
• Independence in audit means taking unbiased viewpoint in audit report, audit tests and evaluation of results. Audit Report will be using by users to make investment decisions.
• Two criteria for auditor to be & be seen as independence:
Independence in mind – The state of mind that permits the expression of a conclusion without being affected by influences that compromise professional judgement, thereby, allowing an individual to act with integrity, and exercise objectivity and professional scepticism.
Independence in appearance – The avoidance of facts and circumstances that are so significant that a reasonable and informed third party, having knowledge of all relevant information, including safeguards applied, would reasonably conclude a firm’s, or a member of the assurance team’s, integrity, objectivity or professional scepticism had been compromised.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART B – PROFESSIONAL ACCOUNTANTS ON PUBLIC PRACTICE
290 – INDEPENDENCE (Audit & Review Engagement)
Application of independence to specific situation:
• Financial interests
• Loans & guarantees
• Business relationships
• Family & personal relationships
• Employment with an audit client
• Temporary staffs assignment
• Recent service with an audit client
• Serving as a Director or officer of an audit client
• Long association of senior personnel of an audit client
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AUD 610: Audit and Assurance Services
AREAS OF CONTROVERSY (the principal complaints)
• Multiple Services The provision of multiple services may affect independence, especially small audit
firm. For the clients, they are comfort to deal with only one person in charge and considered audit firm as “one stop centre” for them.
For small firm, the same staff will do the audit and accounting and therefore may affect the independence. Working paper should be well documented and should be reviewed by engagement partner.
For big firm may not have this problem as they would have different department for accounting and auditing.
• Low-balling The practice of charging special rate for auditing job and then obtain other services
known as low balling. This situation quite common and the independence here is questionable.
• Opinion Shopping Client get second opinion from the other auditors and sometimes put pressure on
current auditors. To solve, may be through communication between the two auditors.
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AUD 610: Audit and Assurance Services
PROFESSIONAL ETHICS PART C – PROFESSIONAL ACCOUNTANTS IN BUSINESS
• 300 – Introduction
• 310 – Potential Conflicts
• 320 – Preparation & Reporting of Information
• 330 – Acting with Sufficient Expertise
• 340 – Financial Interests
• 350 – Inducements
(Please refer MIA By-Law for details)
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AUD 610: Audit and Assurance Services
PROFESSIONAL CONDUCT & PRACTICE PART A – ALL PROFESSIONAL ACCOUNTANTS
• 400 – Induction Course Upon Admission
• 410 – Continuing Professional Education
• 420 – Description & Designatory Letters
• 430 – Public Practice Programme
• 440 – Attention to Correspondence & Enquiries
(Please refer MIA By-Law for details)
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AUD 610: Audit and Assurance Services
PROFESSIONAL CONDUCT & PRACTICE PART B – MEMBERS IN PUBLIC PRACTICE
• 500 – Method of Practice
• 510 – Professional Indemnity Insurance
• 520 – Death or Incapacity of a Sole Practitioner
• 530 – Client Documents & exercise of Lien
• 540 – Referrals
• 550 – Quality Assurance & Practice Review (Please refer MIA By-Law for details)
THE END
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