Ethics

Ethics is defined as the study of moral principles and values that govern actions and decisions of a person or a group. Personal ethics vary from individual to individual, most people within a society are able to agree about what is ethical and unethical behavior.

An ethical dilemma is a situation that people faces involving a decision about appropriate behavior, an ethical dilemma generally involves a situation in which the welfare of one or more other individuals are affected by the decision that they took. Auditors often have to face dilemmas because they often have an effect on the welfare of a large number of people or groups.

Steps involved in decision making:

Identify the problem.

Identify possible courses of action.

Identify any constraints relating to the decision.

Analyze the effects of the courses of action.

Select the best course of action.

All the recognized professions have several common characteristics the most important of these is the responsibility to serve the public.

The AICPA code of professional conduct is designed to provide framework for professional services and responding to other changes in the profession, it consists of two sections the first one is the principles section this is a goal- oriented positively stated discussion of the profession’s responsibilities to the public, the second section are the rules this are enforceable applications of the principles they define the behavior and identify sources of authority for performance standards.

The AICPA also issues ethics rulings that explain the application of the rules and interpretations to specific factual circumstances involving professional ethics.

Independence of mind is a state that permits the certified public accountant to perform an attest service without being affected by influences that compromise his professional judgment. Independence in appearance requires avoidance of circumstances that might cause reasonable and informed third party aware of all relevant information.

Public accountants should evaluate whether a particular threat would lead a reasonable person aware of all relevant facts to conclude that an unacceptable risk of non independence exists.

Types of threats:

 Self- review a part of attest engagement using evidence that results from the firm’s no attest work.

 Advocacy are actions that promote an attest on client’s interest or position.

 Adverse interest actions between the public accountant and the client that are in opposition.

 Familiarity

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