Integrity should be straightforward and honest Objectivity should not allow bias, conflict of interest or undue influence of others

rs to override professional or business judgments. Confidentiality should not disclose any such information to third parties without proper and specific authority Professional Competence and Due Care should act diligently and in accordance with applicable technical and professional standards Professional Behavior should comply with relevant laws and regulations and should avoid any action that discredits the profession

The code provides a framework to assist a professional accountant to identify, evaluate and respond to threats to compliance with the fundamental principles Obligation to evaluate any threats to compliance with the fundamental principles Should take qualitative as well as quantitative factors into account when considering the significance of a threat

Many threats fall into the following categories : Self-interest threats financial or other interest, immediate or close family member Self-review threats previous judgment needs to be reevaluated Advocacy threats promotes a position or opinion to the point that subsequent objectivity may be compromised Familiarity threats close relationship Intimidation threats by threats, actual and perceived

Safeguard that may eliminate or reduce such threats to an acceptable level fall into two broad categories: Safeguard created by profession, legislation or regulation, and Safeguard in the work environment Safeguard created by the profession, legislation or regulation, include, but are not restricted to : Requirements for entry into the profession Continuing professional development requirements Corporate governance regulations Professional standards

Straightforward and honest A professional accountants should not be associated with reports, returns, communications or other that the information : Contains a materially false or misleading statement Contains statements or information furnished recklessly

Impose an obligation on all professional accountants not to compromise their professional or business judgment because or bias, conflict of interest or the undue influence of others

An obligation on all professional accountants to refrain from : Disclosing outside the firm or employing organization confidential information Using confidential information acquired as a result of professional and business relationship to their personal advantage or the advantage of third parties Also : Maintain confidentiality of information disclosed by a prospective client or employer Maintain confidentiality of information within the firm or employing organization Professional accountants are or may be required to disclose confidential information : disclosure is permitted and or required by law

Impose the following obligation on all professional accountants : To maintain professional knowledge and skill at the level required to ensure that clients or employers receive competent professional service To act diligently in accordance with applicable technical and professional standards when providing professional services Professional competence may be divided into 2 separate phases : Attainment of professional competence Maintenance of professional competence

Examples of circumstances that may create selfinterest threats for a professional accountant in public practice : A financial interest in a client or jointly holding a financial interest with a client Undue dependence on total fees from a client Having a close business relationship with a client Concern about the possibility of losing a client Potential employment with a client

Examples of circumstances that may create selfreview threats for a professional accountant in public practice : The discover of significance error during a reevaluation of the work of the professional accountant in public practice Reporting on the operation of financial systems after being involved in their design or implementation

Examples of circumstances that may create advocacy threats for a professional accountant in public practice : Promoting shares in a listed entity when that entity is a financial statement audit client Acting as an advocate on behalf on assurance client in litigation or disputes with third parties

Examples of circumstances that may create familiarities threats for a professional accountant in public practice : A former partner of the firm being a director or officer of the client or an employee in a position to exert direct and significant influence over the subject matter of the engagement A member of the engagement team having a close or immediate family relationship with a director or officer of the client A member of the engagement team having a close or immediate family relationship with an employee of the client who is in a position to exert direct and significant influence over the subject matter of the engagement

Examples of circumstances that may create intimidation threats for a professional accountant in public practice : Being threatened with dismissal or replacement in relation to a client engagement Being threatened with litigation Being pressured to reduce inappropriately the extent of work performed in order to reduce fees

Firm-wide safeguards in the work environment may include : Stresses the importance of compliance with the fundamental principles Members of an assurance team will act in the public interest Policies and procedures to implement and monitor quality control of engagement Advising partner and professional staff of those assurance clients and related entities from which they must be independent. Engagement specific safeguards in the work environment may include : Involving an additional professional accountant to review the work done or otherwise advise if necessary

Client Acceptance : Should consider whether acceptance would create any threats to compliance with the fundamental principles Clients issues that, if known, could threatened compliance with the fundamental principles, incl. for example, client involvement in illegal activities Acceptance decisions should be periodically reviewed for recurring client engagements.

Engagement Acceptance : Should agree to provide only those services that the professional accountant in public practice is competent to perform Such safeguard may include : Acquiring an appropriate understanding of the nature of the clients business Acquiring knowledge of relevant industries or subject matters Consider whether acceptance would create any threats to compliance with the fundamental principles Possessing or obtaining experience with relevant regulatory or reporting requirements Complying with quality control policies and procedures Should consider factors such as reputation, expertise, resources available and applicable professional and ethical standards.

Changes in a Professional Appointment : Professional accountant who is asked to replace another Professional accountant should determine whether any reasons for not accepting the engagement such as threats The significance of the threats should be evaluated, may require direct communication with the existing accountant to established the facts and circumstances behind the proposed changed An existing accountant is bound by confidentiality

Should take a reasonable steps to identify circumstances that could pose conflict of interest, for example, Professional Accountant (PA) competes directly with a client or has a joint venture with a major competitor of a client. Whether the PA has any business interest or relationships with the client or a third party that could give rise to threats Safeguard :
Notofying the client of the firms business interest or

activities that may represent a conflict of interest Notifying is acting for two or more parties in respect of a matter where their respective interest are in conflict

Situation where PA is asked to provide a second opinion on on behalf of a the application of accounting, auditing, reporting or other standards or principles company or an entity that is not an existing client may give rise to compliance with the fundamental principles. For example, a threat where the second opinion is not based on the same set of facts or inadequate evidence.

Quote a fee lower than another is not in itself unethical if the fee quoted is so low that it may be difficult to perform the engagement in accordance with applicalble technical and professional standards for the price May receive referral fee or comission relating to a client, for example, a fee may be received for referring a continuing client to another PA or other expert, may receive a comission from athird party (e.g.software vendor) in connection with the sale of goods or service to the client

May be offered gifts and hospitality from client. Such an offer ordinarily gives rise to threat to compliance with the fundamental principles The significance of the threats will depend on the nature, value and intent behind the offer. Where gifts or hospitality which a reasonable and informed third party, having knowledge of all relevant information, would consider clearly insignificant are made a professional accountant in public practice may conclude that the offer is made in the normal course of business without the specific intent to influence decision making or to obtain information.

To safeguard against such threats, PA entrusted with money (or ather assets) belonging to others should :
Keep such assets separately from personal or firm asset Use such assets only for the purpose for which they are

intended At all times, be ready to account for these assets, and any income, dividends or gains generated Comply with all relevant laws and regulations

should be aware of threats to compliance with the fundamental principles through association with such assets, for example, if the assets were found to derive from illegal activities, such as money laundering

Such safeguard may include :

giving rise to the threat Discussing the issue with the higher levels of management within the firm

Thank you