Transcript PROFESSIONAL ETHICS

CHAPTER 3
PROFESSIONAL ETHICS
ETHICS
• A SYSTEM OR CODE OF CONDUCT
BASED ON UNIVERSAL MORAL
DUTIES AND OBLIGATIONS WHICH
INDICATE HOW ONE SHOULD
BEHAVE. ASSISTS IN THE ABILITY TO
DISTINGUISH GOOD FROM EVIL,
RIGHT FROM WRONG.
SYSTEMS OF ETHICAL
DECISION MAKING
• EGOISM
– ALL PEOPLE OUGHT TO ACT IN THEIR
PERCEIVED BEST INTERESTS
• GOLDEN RULE
– DO UNTO OTHERS
• SITUATION ETHICS
– OBLIGATION IS RELATIVE TO
SITUATION
• UTILITARIANISM
– DECISIONS SHOULD MAXIMIZE GOOD
AND MINIMIZE HARMS
• ACT UTILITARIANISM
• RULE UTILITARIANISM
• UTILITARIAN CALCULUS
• DEONTOLOGY/ABSOLUTE DUTIES
– SYSTEM OF ETHICAL LAWS
• THEORY OF JUSTICE
– JUSTICE OF PROCESS
– JUSTICE OF OUTCOME
• VIRTUE ETHICS
– ARISTOTLE
– QUALITIES OF CHARACTER WHICH
REQUIRE YOU TO DO THE RIGHT THING
– RIGHT IS DEFINED AS GOOD
– GOOD IS DEFINED WITHIN “PRACTICES”
AS THEY FIT INTO SOCIETY
ETHICAL FALLACIES
• IF IT’S LEGAL, IT’S ETHICAL
– TECHNICAL COMPLIANCE WITH LAW
SATISFIES MORAL OBLIGATION
• WHITE LIE FALLACY
– SOME LIES ARE NECESSARY TO PROTECT
FEELINGS
• HERD ETHICS
– EVERYONE IS DOING IT
• ETHICAL DOUBLE STANDARD
– WORKPLACE VS PERSONAL
REBELLIOUS ETHICS AND
ALBERT SPEER
• ALBERT SPEER
– HITLER’S ARCHTECT
– RESPECTABLE, PROFESSIONAL,
SUCCESSFUL
– PURE TECHNICIAN
– TECHNOLOGY AND ACCOUNTABILITY
• REBELLIOUS ETHICS
– NEED TO DISTANCE OURSELVES FROM
PROFESSIONAL ROLES
– CHALLENGE REQUIREMENTS
• THE FAILED ARCHITECT
– SEPARATE COMMUNITY OF
ARCHITECTURE
– FAILURE TO REFLECT
– CORRUPTION OF PROFESSION
• WHO REBELS?
– VARIETY OF PERSPECTIVES
– CULTURAL AND ROLE-BOUND
– MASTER STORIES
CODE OF PROFESSIONAL
CONDUCT
• PRINCIPLES
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RESPONSIBILITIES
PUBLIC INTEREST
INTEGRITY
OBJECTIVITY AND INDEPENDENCE
DUE CARE
SCOPE AND NATURE OF SERVICES
• RULES
– 101 - INDPENDENCE
• IN FACT
– MENTAL QUALITY OF BEING WITHOUT BIAS
– GAAS STANDARD
– YOU JUDGE
• IN APPEARANCE
– PERCEPTION OF PARTIES OUTSIDE AUDIT
– AVOIDANCE OF CONFLICT OF INTEREST
SITUATIONS DEFINED
– CODE OF CONDUCT
• PROBLEMS
– EMPLOYMENT
– SCOPE OF SERVICES
– MARKETING ORIENTATION
CONFLICTS OF INTEREST
• A PERSON HAS A CONFLICT OF INTEREST
IF a) THEY ARE IN A RELATIONSHIP WITH
ANOTHER REQUIRING THEM TO
EXERCISE JUDGMENT IN THAT OTHER’S
SERVICE AND b) THEY HAVE AN INTEREST
TENDING TO INTERFERE WITH THE
PROPER EXERCISE OF JUDGMENT IN
THAT RELATIONSHIP
– 203 - ACCOUNTING PRINCIPLES
• A MEMBER SHALL NOT EXPRESS AN
OPINION THAT THE FINANCIAL STATEMENTS
ARE PRESENTED IN CONFORMITY WITH
GAAP, IF THEY KNOW THAT SUCH
STATEMENTS CONTAIN ANY MATERIAL
DEPARTURE
• 203.1
– STRONG PRESUMPTION THAT GAAP RESULTS IN A
FAIR PRESENTATION
– IN UNUSUAL CIRCUMSTANCES, GAAP MAY
MISLEAD
– AUDITOR MAY EXPRESS CLEAN OPINION IF, IN
JUDGMENT, DEPARTURE IS JUSTIFIRD TO KEEP
STATEMENTS FROM BEING MISLEADING
– 301 - CONFIDENTIAL CLIENT
INFORMATION
• A MEMBER IN PUBLIC PRACTICE SHALL NOR
DISCLOSE ANY CONFIDENTIAL CLIENT
INFORMATION WITHOUT SPECIFIC CONSENT
OF CLIENT
• EXCEPTIONS
• PROBLEMS
– “CONFIDENTIAL INFORMATION” IS NOT DEFINED
– VIOLATIONS OF LAW
– INFORMATION USEFUL TO OTHER AUDITORS
WITHIN FIRM
– 302 - CONTINGENT FEES
• A MEMBER IN PUBLIC PRACTICE SHALL NOT
– PERFORM FOR A CONTINGENT FEE ANY PROFESSIONAL
SERVICE FROM A CLIENT IF
» AUDIT OR REVIEW OF FINANCIAL STATEMENTS
– 400 - RESPONSIBLITIES TO COLLEAGUES
• NONE
– 501 - ACTS DISCREDITABLE
• A MEMBER SHALL NOT COMMIT AN ACT
DISCREDITABLE TO THE PROFESSION
– 501.1 RETENTION OF CLIENT RECORDS
– 501.2 DISCRIMINATION AND HARASSMENT
– 501.3 FAILURE TO FOLLOW STANDARDS IN
GOVERNMENT AUDITS
– 501.4 NEGLIGENCE
– 503 - COMMISSIONS AND REFERRAL
FEES
• 503.A - PROHIBITED COMMISSIONS
– A MEMBER SHALL NOT FOR A COMMISSION
RECOMMEND OR REFER TO A CLIENT ANY
PRODUCT OR SERVICE IF THAT MEMBER
PERFORMS AN AUDIT, REVIEW, ETC