Question Tag: Code of Ethics

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  • 6 Marks

FR – Nov 2019 – L2 – Q5b – Professional and Ethical Issues in Financial Reporting

Identify ethical principles and apply them to a scenario involving errors in previous accounts and inexperience with complex tax issues.

Mr. Charles Agyekum is a qualified ICAG member who prepares accounts on behalf of a small independent trader. An annual practicing certificate is not required.

This is the first year the member has prepared these accounts. When compiling the most recent accounts, he noticed that some errors were noted in the previous accounts. It appeared that the accounts were based on incomplete records as certain costs were excluded, either intentionally or because records were not maintained.

The client has also requested some additional work to be completed on a complex tax issue. However, the member has no prior experience and does not feel competent to do the work. The client would also like him to provide an audit opinion as they are planning to apply for a bank loan and the bank would like some additional assurance.

Required:
In accordance with IFAC’s code of ethics, explain which ethical principles apply and comment on their relevance to the above scenario.

  • Integrity: This is about being truthful, straightforward, and honest, dealing fairly with people and situations. It rules out making misleading or false statements, whether by omission or inclusion of information, either knowingly or without taking care to find out. Mr. Charles Agyekum has highlighted his concerns to his client and explained his views with a clear rationale.
  • Professional Competence and Due Care: This is about acquiring and maintaining appropriate technical and other relevant skills and competence to perform work, doing it thoroughly and correctly, and ensuring users of the output understand its context and limitations. Mr. Charles Agyekum has acknowledged his professional ability and has identified a situation where he may not be the most appropriate accountant to complete the complex tax work.
  • Professional Behavior: This is about complying with standards and laws, and avoiding actions that might bring the profession into disrepute, such as making unsubstantiated criticisms of a fellow professional or exaggerating one’s experience. Throughout this scenario, Mr. Charles Agyekum has behaved professionally, as he has explained his rationale to his client and not completed any work that he was unable to finish to an appropriate standard.
  • 5 Marks

AA – July 2023 – L2 – Q5a – Professional and Ethical Considerations

Explanation of the five fundamental principles of the ICAG Code of Ethics.

a) As a member of the International Federation of Accountants (IFAC), the Institute of Chartered Accountants, Ghana (ICAG) subscribes to the code of ethics prescribed by the International Ethics Standards Board for Accountants (IESBA).

Required:
Explain each of the FIVE (5) fundamental principles of the Code of Ethics of the Institute of Chartered Accountants, Ghana (ICAG). (5 marks)

a) Five fundamental principles of the ICAG Code of Ethics:

  1. Integrity: A professional accountant must be straightforward and honest in all professional and business relationships.
  2. Objectivity: A professional accountant must not allow bias, conflict of interest, or undue influence of others to override professional or business judgments.
  3. Professional competence and due care: A professional accountant must maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service. They must also act diligently and in accordance with applicable technical and professional standards.
  4. Confidentiality: A professional accountant must respect the confidentiality of information acquired as a result of professional and business relationships and must not disclose such information without proper authority or unless there is a legal or professional right or duty to disclose.
  5. Professional behavior: A professional accountant must comply with relevant laws and regulations and avoid any action that discredits the profession.
  • 5 Marks

AA – May 2017 – L2 – Q1b – Professional and Ethical Considerations

Identification of major threats to compliance with professional ethics.

The IFAC International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants sets out the five fundamental principles of professional ethics and provides a conceptual framework for applying those principles. Professional Accountants must apply this conceptual framework to identify threats to compliance with the principles, evaluate their significance, and apply appropriate safeguards to eliminate or reduce them so that compliance is not compromised.

Required: Identify FIVE major threats identified in the code of ethics, giving examples of each

  1. Self-interest threats: This occurs when financial or other interests of the accountant or their family members may influence their decision-making. Example: Having a financial interest in a client or being overly dependent on fees from a client.
  2. Self-review threats: This happens when an accountant is required to re-evaluate their own work or previous judgments. Example: Auditing financial statements that the accountant previously prepared.
  3. Advocacy threats: This arises when an accountant promotes a client’s position or opinion to the extent that their objectivity may be compromised. Example: Representing a client in legal disputes.
  4. Familiarity threats: This occurs when an accountant becomes too close to a client, leading to a lack of professional skepticism. Example: A close personal relationship with a client’s director.
  5. Intimidation threats: This occurs when an accountant is deterred from acting objectively due to real or perceived pressures. Example: Being threatened with dismissal by a client if the accountant does not comply with their demands.
  • 5 Marks

AA – May 2021 – L2 – Q2a – Professional and Ethical Considerations

Explain the five fundamental principles of the Code of Ethics for audit practitioners.

The IFAC Code of ethics governs the practice of auditing to ensure that practitioners will act in the public interest. Furthermore, in an audit, many relevant auditing standards must be followed to perform work that will serve the needs of the users of the Auditor’s report.

Required:
Explain each of the FIVE (5) fundamental principles of the Code of Ethics and conduct for professional audit practitioners. (5 marks)

The five fundamental principles of the Code of Ethics are:

  • Integrity: A professional accountant should be honest and straightforward in performing professional services.
  • Objectivity: A professional accountant should be fair and not allow personal bias, conflict of interest, or influence of others to override objectivity.
  • Professional competence and due care: A professional accountant should show competence and duty of care by keeping up-to-date with developments in practice, legislation, and techniques.
  • Confidentiality: A professional accountant should respect the confidentiality of information acquired during the course of providing professional services and should not use or disclose such information without obtaining client permission.
  • Professional behavior: A professional accountant should act in a manner consistent with the profession’s good reputation and refrain from any conduct that might bring discredit to the profession.
    (5 points @ 1 mark each = 5 marks)
  • 20 Marks

CSEG – May 2017 – L2 – Q5 – Corporate governance framework | Business ethics

Discuss the fundamental principles for a code of ethics in an NGO and the benefits of good corporate governance.

Covenant Mission (CM) is a non-governmental organisation that provides charitable support to disadvantaged families.

It is currently involved in a number of community projects to assist in the provision of clean water supply to families in Liberia, Nigeria, and the Gambia. In its home country, Ghana, it focuses more on assisting clients in accessing state-granted financial support as well as providing counselling and psychological support to less privileged people.

The NGO has grown very rapidly in recent years as demand for its services has increased. In line with this rising demand, it has begun to slowly evolve from an enterprise primarily run by volunteers to an institution employing professional managers from the private sector. These changes are considered essential in supporting the sustainability of the charity.

The board of trustees at the NGO recognizes the need to adopt a relevant code of ethics as part of necessary governance support structures. They are, however, concerned about recent criticism of such codes and wish to ensure that any code developed is effective throughout the organization.

Required:

a) Advise CM on FOUR fundamental principles to be included in its code of ethics. (8 marks)

b) Explain FOUR benefits of good corporate governance to CM. (12 marks)

a) Fundamental Principles to be Included in a Code of Ethics:

  1. Integrity: Integrity involves being straightforward and honest in all professional and business relationships. CM must ensure that all members act with integrity in their interactions with beneficiaries, donors, and stakeholders, fostering trust and credibility.
  2. Objectivity: Objectivity requires that CM members not allow bias, conflict of interest, or undue influence from others to override professional or business judgments. This principle ensures that decisions are made in the best interests of the beneficiaries without favoritism or prejudice.
  3. Confidentiality: Confidentiality entails respecting the privacy of information acquired as a result of professional and business relationships. CM must ensure that sensitive information about beneficiaries or operations is protected and only disclosed when authorized or legally required.
  4. Professional Competence and Due Care: This principle emphasizes maintaining professional knowledge and skill at the level required to ensure that services provided are based on current practices, legislation, and techniques. CM should ensure that all members act diligently and in accordance with applicable standards, particularly as the organization transitions to employing professional managers.

(Total: 8 marks)

b) Benefits of Good Corporate Governance:

  1. Enhanced Accountability and Transparency: Good corporate governance ensures that CM’s activities are conducted in an open and transparent manner, which builds trust with stakeholders, including donors, beneficiaries, and regulatory bodies. This transparency is crucial for maintaining the NGO’s reputation and securing ongoing support.
  2. Improved Decision-Making: By adopting good governance practices, CM can benefit from more structured and informed decision-making processes. The involvement of professional managers and a well-defined board of trustees ensures that decisions are made after careful consideration of all relevant factors, leading to more effective and efficient operations.
  3. Sustainability and Long-Term Success: Good governance practices contribute to the sustainability of CM by ensuring that resources are managed efficiently and responsibly. This approach not only helps in achieving immediate objectives but also secures the long-term future of the NGO, allowing it to continue serving disadvantaged communities.
  4. Risk Management: Effective governance frameworks include robust risk management practices, which help CM identify, assess, and mitigate potential risks that could affect its operations. This proactive approach to risk management protects the NGO from financial, operational, and reputational harm, ensuring continuity of services.

(Total: 12 marks)

  • 3 Marks

BCL – May 2020 – L2 – Q3d – Governance and Ethical Issues Relating to Business

Identify three codes of ethics for accountants in Ghana.

Code of Ethics are drawn up to be followed by all the company’s structures and professionals. It serves as a guide to professional conduct and guarantees concerns about efficiency, competitiveness, and profitability.

Required:

Identify THREE (3) codes of ethics for Accountants in Ghana.
(3 marks)

Three codes of ethics for accountants in Ghana include:

  1. Integrity: Accountants must be straightforward and honest in all professional and business relationships.
  2. Confidentiality: Accountants must respect the confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without proper and specific authority unless there is a legal or professional right or duty to disclose.
  3. Objectivity: Accountants must not allow bias, conflict of interest, or undue influence of others to override professional or business judgments.

 

  • 10 Marks

AAA – May 2016 – L3 – Q1b – Professional responsibility and liability | Rules of professional conduct

Identify and evaluate ethical threats in an audit engagement and recommend safeguards to mitigate these threats.

Dibidibi & Co., an audit and assurance firm, has been engaged as auditors for BCG Bank Ltd, a public limited liability company, for some time now. BCG Bank has sixty branches throughout the country and branches in Togo, Burkina Faso, and Cote d’Ivoire. The Bank is one of the banks in the country which can boast of large landed properties. Dibidibi & Co. receives about 20% of its income from this particular client. Before last year’s audit, the bank engaged the audit firm to value its Land and Buildings in all its branches and headquarters. This work was executed by the audit firm and a report has been issued to management. The report has been incorporated in this year’s financial statements to be audited soon. Dibidibi & Co. sees BCG Bank Ltd. as a very important client whose works are always executed with dispatch.

i) Identify and evaluate the significance of any threats to the Code of Ethics for Professional Accountants raised in the case. (4 marks)

ii) Recommend safeguards to eliminate the threats (mentioned in (i) above) or reduce them to an acceptable level. (6 marks)

i) Threats to the Code of Ethics for Professional Accountants:

  • Self-interest or Intimidation Threat: As the audit firm receives about 20% of its income from just one audit client, there is a self-interest or intimidation threat. The firm will be concerned about losing the client. The self-interest and intimidation threats are significant considering the nature and duration of the breach – that is the high percentage of income from a single client received for some time now; and the knowledge of the audit firm of such interest.
  • Self-review Threat: The valuation services provided by the audit firm raise a self-review threat. If an audit firm performs a valuation that will be included in financial statements audited by that firm, a self-review threat arises. This threat is significant as the valuation of Land and Buildings of all branches of the bank, including the head office, is material to the financial statement to be audited.

ii) Safeguards to Eliminate or Reduce the Threats:

  • For Self-interest or Intimidation Threats:
    • Reducing dependence on the client.
    • Implementing external quality control reviews.
    • Consulting a third party, such as a professional regulatory body or a professional accountant, on key audit judgments.
    • Conducting internal quality control reviews.
    • As the bank is a public interest entity and the firm’s total fees have been that high for two consecutive years, the Code of Ethics provides that the firm shall:
      • Disclose this to those charged with governance.
      • Conduct a review, either by an external professional accountant or by a regulatory body.
      • Since the total fees significantly exceed 15%, a pre-issuance review shall be required, i.e., a review before the audit opinion on the second year’s financial statements.
  • For Self-review Threat from the Valuation Services:
    • Conducting a second partner review.
    • Confirming that the client understands the valuation and the assumptions used.
    • Ensuring that the client acknowledges responsibility for the valuation.
    • Using separate personnel for the valuation and the audit.

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