- Systematic Process
- To gather and evaluate evidence and information objectively to make an evaluation
- Evaluate the assertations about economic actions and situations made by management
- Determine the correlation of assertations both qualitative and quantitative against
predetermined criteria
- Communicate these results in writing to the users of this data
• How does Ethics tie in with SAICA
- All SAICA members are registered after clerkship and exams
- Ethics (Code of Professional Conduct) are what all CA’s are expected to follow, including
accountants working outside SA, based on an international standard.
- IRBA (Independent Regulatory Board of Auditors) sign off on audit reports being conducted, are
all registered auditors and accountants
- Auditing Profession Act
- Code of Professional Conduct Part A and Part B (B is for registered Auditors) all based on
international standards
Ethics
A set of principles of right conduct and a theory or system of moral values
SAICA Code of Professional Conduct
Part 1A – General Application of the Code
• Applicable to all CAs
• Definitions
- Assurance engagement can be an audit or a review engagement or other assurance
engagements where no opinion is expressed
- Direct financial interest is when something is owned, under control of or can influence the
investment decisions
- Indirect financial interest is where an individual has no control and cannot influence investment
decisions
- Contingent fees are fees contingent on a condition
- Immediate family is your spouse or the equivalent
- Close family is your parent, child or sibling
, - Professional services are audits, reviews, tax, advice
- Conflict of interest is something that creates a threat to objectivity and other fundamentals
Conceptual Framework
• Professional Accountants must:
1. Exercise Professional Judgement
- Apply relevant training, knowledge, skill, and experience
- Consider:
- Is information missing?
- Are there inconsistencies between facts, circumstances, and expectations?
- Is the professional accountant’s expertise sufficient?
- Is further consultation required?
- Does the information provide reasonable basis for conclusion?
- Are there any preconceptions or bias?
- Are there any other possible and reasonable conclusions?
2. Remain alert to new information and changes
3. Use the reasonable and informed third party test (RITP)
- Would the same conclusion be reached by a reasonable and informed third party?
- Weigh all relevant facts and circumstances available at the time (or expected to know)
- Third party does not have to be a professional accountant but must have relevant knowledge
- Evaluates the appropriateness of conclusions in an impartial manner
Identify the Threats – Part 1A
Threats to the Fundamental Principles
1. Self-interest
-Financial or other interest to a CA or a family member, the CA stands to benefit from something
2. Self-review
- “Marking your own Homework”
- The CA worked for the client in the previous year and prepared the financial statements and now
works for the auditing firm and must audit them
3. Advocacy
- A CA promotes an opinion or a position to the point where objectivity might be influenced.
- E.g. You testify on behalf of a client in court, you support them to the point where you are no longer
independent or objective towards them
4. Familiarity
, - Close family, business or social relationship could cause a CA to be sympathetic to the interests of
others. E.g. An audit partner being lifelong friends with a client
5. Intimidation
- The CA could be deterred from acting in an objective manner with threats, whether they are actual or
perceived.
- E.g. A boss puts pressure on an employee to manipulate financial statements by threatening to fire
them. A client threatens to walk away from the auditing firm if the auditors do not give an unqualified
opinion
- Evaluate the significance of the threat by using qualitative and quantitative factors
The Fundamental Principles – Part 1B
• Integrity
- Straight forward and honest in all professional relationships
- Fair dealing and truthfulness
- Not be associated with and does not sign off on – materially false/misleading statements,
recklessly furnished material, omissions that could be misleading, CA(SA) may not be associated
with any of these
• Objectivity
- Do not compromise business judgement due to bias, conflict of interest or undue influences
• Professional Competence and Due Care
- Required to maintain professional knowledge required to render competent professional
services
- Act diligently and professionally in accordance with the applicable standards
- Professional Competence involves attainment, process where you attain the title of a CA(SA),
and maintenance such as training and updates programs.
- Diligence, act in accordance with the requirements of an assignment, thoroughly, carefully, in a
timely manner. Ensure subordinates have the appropriate training and supervision.
- Inform clients of the limitations of the service. Obtain knowledge of the relevant industry where
you can otherwise hire an expert to assist
• Confidentiality
- Refrain from disclosing confidential information (Unless there is a legal or professional right or
duty to disclose)
- Maintain confidentiality in social, business and family environments
- Maintain confidentiality of information disclosed by prospective client
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller StelliesBAcc. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.76. You're not tied to anything after your purchase.
