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The code of ethics for auditors sets forth four rules: 1. Accordingly, compliance with the remainder of this Code will ensure compliance with the principles of the IESBA Code. ICAEW’s code of ethics in place to 31 December 2010 replaced ICAEW’s guide to professional ethics on 1 September 2006. ... Common law requires the auditor to perform professional services with due care. 5: Non-audit services provided to audit clients. AP Calculus Exam Calculator: What's Allowed? During the period of the professional engagement, a covered member. Personal self-interest must not prevail over these duties. Additionally, they must follow common law, legal opinions issued by judges such as due care, providing a comparable level of knowledge and competencies as colleagues in a similar profession. If members of the audited organization offer to take the audit team to lunch, it is the team leader responsibility to clarify the rules by which the lunch is accepted, such as limiting the time away from the audited facility. In performing an attest engagement, a member should consult the rules of his or her state board of accountancy, his or her state CPA society, the Public Company Accounting Oversight Board and the U.S. Securities and Exchange Commission (SEC) if the member’s report will be filed with the SEC, the U.S. Department of Labor (DOL) if the member’s report will be filed with the DOL, the Government Accountability Office (GAO) if a law, regulation, agreement, policy or contract requires the member’s report to be filed under GAO regulations, and any organization that issues or enforces standards of independence that would apply to the member’s engagement. They have common objectives, whether they work in capacities of external auditors, internal auditors, financial experts, tax experts, and management accountants. Integrity: Clients expect auditors to uphold industry principles and guidelines 2. A member, associate member, or international associate of the American Institute of Certified Public Accountants. Trustee for any pension or profit-sharing trust of the client. Internal auditors are employees of the company that they are auditing. A firm may not designate itself as “Members of the American Institute of Certified Public Accountants” unless all of its CPA owners are members of the Institute. Objectivity: Auditors must perform services free from bias, impartiality and self-serving activities 3. Proactively establishing a set of professional ethics … to preclude a member from initiating a complaint with, or responding to any inquiry made by, the professional ethics division or trial board of the Institute or a duly constituted investigative or disciplinary body of a state CPA society or Board of Accountancy. Members of any of the bodies; identified in (4) above and members involved with professional practice reviews identified in (3) above shall not use to their advantage or disclose any member’s confidential client information that comes to their attention in carrying out those activities. The ICAEW Code implements the IFAC Code above so that following it ensures compliance with the IFAC Code. Tech and Engineering - Questions & Answers, Health and Medicine - Questions & Answers, Working Scholars® Bringing Tuition-Free College to the Community, Failure to perform responsibilities and duties outlined in the contractual relationship, Fannie Mae v. KPMG - auditors failed to institute professional judgement which led to a $6.3 billion restatement for Fannie Mae, a mortgage lender, Misrepresenting material facts in financial statements to mislead another entity, State Street Trust Co. v. Ernst - auditors at Ernst did not inform State Street Trust of client's overstatement of receivables, and State Street Trust made a significant loan to client based on erroneous information, Gross negligence in preparing financial statements leading to financial loss, Phar-Mor v. Coopers & Lybrand - auditors failed to detect inflated inventory and other financial manipulations which resulted in $985 million overstatement for Phar-Mor, a discount drug store, Gain an understanding of the organization and its operations, Analyze account balances and financial transactions, Producing statements containing untrue material facts, Failing to include information to mislead, Create statements containing untrue material facts. A professional accountant has a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services based on current developments in practice, legislation, and techniques. It is the responsibility of the auditor to ensure that they remain independent of the client entity. In the auditing profession, ethics represent one facet of the responsibilities of auditors. Followed GAAS 2. This is influenced by the guidance of IF AC (the International Federation of Accountants, of which ICAEW is a member). Acting in the public interest involves having regard to the legitimate interests of clients, government, financial institutions, employees, investors, the business and financial community, and others who rely upon the objectivity and integrity of the accounting profession to support the dignity and orderly functioning of commerce. 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