Summary
Samenvatting - Accounting ethics
- Course
- Institution
Samenvatting van de slides en de les. Ik had een 17/20
[Show more]
Seller
Followmerelpeeraer
Content preview
ACCOUNTING EHTICSINHOUD
1. introduction .................................................................................................................................................... 5
1.1. what is accounting ethics ...................................................................................................................... 5
1.2. Why does accounting ethics matter? .................................................................................................... 5
1.3. Who are the stakeholders? ................................................................................................................... 5
1.4. Who are the players? ............................................................................................................................ 5
1.5. External audit of the financial statements ............................................................................................ 6
1.6. IESBA code of ethics for professional accountants................................................................................ 7
1.7. audit quality ........................................................................................................................................... 7
1.8. audit firm culture ................................................................................................................................. 10
1.9. economics of auditing ......................................................................................................................... 10
1.9.1. demand ........................................................................................................................................... 11
1.9.2. supply .............................................................................................................................................. 11
1.10. data driven audit environment ............................................................................................................ 12
1.11. Functioning of the audit market .......................................................................................................... 12
1.12. regulation ............................................................................................................................................ 12
1.13. Public oversight ................................................................................................................................... 13
2. ethical decsion making .................................................................................................................................. 15
2.1. What is ethics? ........................................................................................................................................... 15
2.1.1. What is ethics not? .............................................................................................................................. 15
2.1.2. What is ethics ...................................................................................................................................... 15
2.2. Ethical reasoning: implications for accounting .......................................................................................... 15
2.2.1 Modern moral philosophies ................................................................................................................. 15
2.3. Cognitive processes and ethical decision making in accounting ................................................................ 17
2.3.1. Heinz and the drug .............................................................................................................................. 17
2.3.2. Kohlberg stages of moral development .............................................................................................. 18
2.3.3. Rest 4 component model of ethical decision making ......................................................................... 18
2.3.4. integrated ethical decision making process ....................................................................................... 19
2.3.5. Cases ................................................................................................................................................... 19
2.4. Giving voice to values ................................................................................................................................. 19
3 Organizational ethics and corporate governance ......................................................................................... 22
3.1. Framwork for understanding ethical decision making ...................................................................... 22
3.2. Ethical dissonance model .................................................................................................................... 22
3.3. Seven signs of ethical collapse............................................................................................................. 23
1
, 3.4. Establishing an ethical culture ............................................................................................................. 23
3.4.1. Ethics in the workplace ................................................................................................................... 24
3.4.2. Character and leadership in the workplace .................................................................................... 24
3.5. Surveys................................................................................................................................................. 24
3.5.1. KPMG’s integrity survey 2013 ......................................................................................................... 25
3.5.2. 2018 global business ethics survey ................................................................................................. 25
3.5.3. KPMG’s integrity survey 2019 ......................................................................................................... 25
3.5.4. 2021 global business ethics review ................................................................................................ 26
3.6. Fraud .................................................................................................................................................... 27
3.6.1. Behavioural indicators of fraud ....................................................................................................... 27
3.6.2. Financial statement fraud ............................................................................................................... 27
3.6.3. Why does financial statement fraud occur? ................................................................................... 28
3.7. (Sustainable) corporate governance ................................................................................................... 28
3.7.1. Best practices of governances ......................................................................................................... 28
3.7.2. Corporate governance: groups involved ......................................................................................... 29
3.7.3. Audit committee ............................................................................................................................. 29
3.7.4. Internal auditors .............................................................................................................................. 29
3.7.5. Internal controls .............................................................................................................................. 30
3.7.6. External auditors ............................................................................................................................. 31
4. Ethics and professional judgement in accounting ........................................................................................ 32
4.1. Professional judgement ....................................................................................................................... 32
4.1.1. Professional judgement in auditing................................................................................................. 32
4.1.2. What drives professional judgement? ............................................................................................ 32
4.1.3. Judgment bias ................................................................................................................................. 33
4.1.4. Judgement biases depend on environmental factors ..................................................................... 33
4.1.5. The profession’s response: judgment framework in auditing......................................................... 33
4.1.6. Judgement traps .............................................................................................................................. 35
4.1.7. Avoiding judgement traps ............................................................................................................... 37
4.1.8. What makes a good coach in auditing?........................................................................................... 38
4.2. Auditor scepticism ............................................................................................................................... 39
4.2.1. Challenges to professional scepticism............................................................................................. 40
4.2.2. Safeguards to professional scepticism ............................................................................................ 40
4.2.3. Audit deficiencies ............................................................................................................................ 41
4.3. Public interest in auditing .................................................................................................................... 41
5. Fraud in financial statements and the role of the auditor ............................................................................ 45
5.1. fraud in financial statemetns ............................................................................................................... 45
5.2. fraudulent financial reporting ............................................................................................................. 46
2
, 5.3. Error, fraud and illigal acts ................................................................................................................... 46
5.4. the fraud triangle ................................................................................................................................. 47
5.5. dark triad personality trait s ................................................................................................................ 48
5.6. Fraud risk assessement ........................................................................................................................ 49
5.7. Internal control assessment ................................................................................................................ 49
PwC’s 2022 global economic crime and fraud survey ................................................................................... 50
5.8. management representation............................................................................................................... 51
5.9. Audit committee responsibilities for fraud risk assessment ............................................................... 51
5.10. Auditor’s communication .................................................................................................................... 51
5.11. audit reports ........................................................................................................................................ 52
5.11.1. Internal control over financial reporting .................................................................................... 52
Concluding thoughts ......................................................................................................................................... 52
6. Earning management .................................................................................................................................... 54
6.1. Motivation to manage earnings .......................................................................................................... 54
6.2. Is earning managemetn legal? ............................................................................................................. 54
6.2.1. Green mountain coffee roaster....................................................................................................... 55
6.3. Using social media to report earnings guidance and financial results ................................................ 55
6.4. Non gaap measures of earnings ( form of earning management) ...................................................... 55
6.5. income smoothing ( form of earning manamgent) ............................................................................. 56
6.6. charactersitics of earnings management ............................................................................................ 56
6.7. some definitions of earnings management ......................................................................................... 57
6.8. ethics of earnings management .......................................................................................................... 58
6.8.1. continuum of eearnings managemetn ............................................................................................ 58
6.8.2. acceptability of earnings management from a materiality perspective ......................................... 58
6.9. good to know ....................................................................................................................................... 59
6.10. financial shenanigans .......................................................................................................................... 59
6.11. red flags of earning management........................................................................................................ 60
6.12. Restatements ....................................................................................................................................... 60
6.13. conclusion ............................................................................................................................................ 60
7. quality control & public oversight ................................................................................................................. 63
7.1. quality control ..................................................................................................................................... 63
7.2. Elements of a system of quality control .............................................................................................. 63
7.2.1. tone at the top ................................................................................................................................ 63
7.2.2. relevant ethical requirements ......................................................................................................... 64
7.2.3. acceptance and continuance of client relationships and specific engagements ............................ 64
7.2.4. human resources ............................................................................................................................. 65
7.2.5. engagement performance ............................................................................................................... 65
3
, 7.2.6. monitoring ....................................................................................................................................... 66
7.3. documentation of the system of quality control ................................................................................. 66
7.3.1. transparancy report ........................................................................................................................ 66
7.4. public oversight ................................................................................................................................... 67
7.4.1. PCAOB ............................................................................................................................................. 68
7.4.2. CEAOB ( european level) ................................................................................................................. 69
7.4.3. IFIAR ( on international level) .......................................................................................................... 69
8. ethical leadership .......................................................................................................................................... 73
8.1. ethical refelction .................................................................................................................................. 73
8.2. what is ethical leadership .................................................................................................................... 73
8.3. ethical leadership in accounting firms ................................................................................................. 74
8.4. research on leadership and audit firms ............................................................................................... 74
8.5. ethical leadershio and the internal audit function .............................................................................. 77
8.6. different types of leaders .................................................................................................................... 77
8.7. social learning theory ( role model) ..................................................................................................... 77
8.8. ethical leadership competence ........................................................................................................... 77
8.9. the ethical leadership scales ................................................................................................................ 78
8.10. ethical leadership failure ..................................................................................................................... 79
8.11. whistleblowing in accounting .............................................................................................................. 79
8.12. moral intensity ..................................................................................................................................... 80
8.13. concluding thought .............................................................................................................................. 80
4
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 merelpeeraer. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.08. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
56326 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now