Objectivity – Knowsia

BMIS – L1 – SA – Q13.2 – Professional ethics in accounting and business

Defines the principle of objectivity for accountants.

Question

Which of the following fundamental principles of ethical conduct for accountants means that an accountant should be independent, free from bias and from undue influence by other people?

A Confidentiality

B Objectivity

C Integrity

D Professional behaviour

Answer

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Tags: Bias, Ethics, Independence, Objectivity, Professional conduct
Level: Level 1

Topic: Professional ethics in accounting and business

BMIS – L1 – SA – Q13.1 – Professional ethics in accounting and business

Identifies principles expected of professional accountants in their work.

Question

Professional accountants are expected in their work to apply the principles of integrity, objectivity, professional competence and due care, confidentiality and

A transparency and honesty

B technical standards and openness

C honesty and professional behaviour

D professional behaviour and technical standards

Answer

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Tags: Confidentiality, Ethics, Integrity, Objectivity, Professional behaviour, Professional principles
Level: Level 1

Topic: Professional ethics in accounting and business

BMIS – L1 – Q9 – Professional ethics in accounting and business

Evaluate ethical issues in an accountant’s actions across four scenarios.

Question

Accountant’s behaviour

The fundamental ethical principles for accountants apply to accountants in business as well as accountants in practice.

(a) A fundamental ethical principle in accountancy is that an accountant should be objective, avoiding bias and undue influence. It seems that Kofi has allowed his friendship with the production director to affect his forecasts of costs, and so he is in breach of the principle of objectivity.

(b) The chairman of the company has purchased some expensive evening gowns for his wife at a Lagos fashion show. He tells Kofi to record the cost of the evening gowns as a company expense, as the cost of new protective clothing for workers in the production department. Kofi does what he has been told.

(c) The managing director asks Kofi if he can construct a spreadsheet model for analysing costs. Kofi has never constructed a spreadsheet model, but he does not want the managing director to give the work to a junior accountant in the department. He therefore says that he can construct the spreadsheet. He thinks that if he takes the work home, his sister will be able to help him: he knows that she is good with spreadsheets and will probably help him if asked.

(d) Kofi attends a party at the weekend where he mentions to a friend that he thinks his company is getting into serious financial trouble because it is about to lose a major contract. The friend later mentions his concerns for Kofi’s future to another person at the party, and explains why Kofi might be about to lose his job. The person that the friend speaks to is a senior manager in a rival company to the company that Kofi works for.

Answer

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Tags: Confidentiality, Ethical Principles, False Accounting, Information Disclosure, Integrity, Legal Compliance, Objectivity, Professional Behavior, Professional Competence
Level: Level 1

Topic: Professional ethics in accounting and business

SCS – L3 – Q26 – Professional practice and codes of ethics

Advise Unity Aid on four fundamental principles for its code of ethics.

Question

Unity Aid (UA) 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 Sierra Leone, Kenya, and Senegal. In its home country, Uganda, 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 recognize 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 UA on FOUR fundamental principles to be included in its code of ethics.

(b) Explain FOUR benefits of good corporate governance to UA.

Answer

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Tags: Code of Ethics, Confidentiality, Governance, Integrity, NGO, Objectivity, Professional Competence
Level: Level 3

Topic: Professional practice and codes of ethics

FR – L2 – Q9 – Professional and Ethical Issues in Financial Reporting

Identify ethical issues in two cases involving financial reporting decisions by ICAG accountants

Question

TWO CASES

Case 1
Kofi Mensah has been on a two-year study sabbatical in Canada and this is his first job on returning to work. Kofi Mensah qualified as an ICAG chartered accountant just before his sabbatical. He worked in a medium-sized practice with wide experience of clients in the mining, manufacturing, and agricultural sectors.
Volta Assurance Limited is a subsidiary of a listed group involved in financial services. The financial controller of Volta Assurance Limited has been on long-term sick leave. Kofi Mensah has been offered an appointment as temporary financial controller three months before the 31 December 20X9 year-end.
Kofi Mensah would be responsible for preparing the financial statements for the year ended 31 December 20X9. Key areas of the financial statements include lessor accounting, financial instruments, and insurance contracts.
During his interview for the post, the group finance director told Kofi Mensah that the group is looking for a strong financial position and performance from the subsidiary and that if Kofi Mensah helps deliver it, he is sure to obtain a permanent post in the group.

Case 2
Kwame Osei is an ICAG Chartered Accountant and works as a financial accountant working for Kumasi Builders plc.
Kumasi Builders plc is about to finalise its financial statements for the year ended 31 December 20X9 and will release its results in two days’ time.
One of Kwame Osei’s tasks during the frantic year-end work was to perform an impairment review on certain assets owned by the company. There were indications of impairment, but Kwame Osei’s calculation of recoverable amount showed that no assets were impaired.
Kwame Osei has just read an article on spreadsheet error. This led him to review the spreadsheets that he built to perform the recoverable amount calculations, and he has found an error in the logic. This error, if corrected, would have led to the company recognising a material impairment loss.
The loss, if recognised, would lead to the profit figure falling below the level at which Kwame Osei’s bonus is triggered. He is also concerned that his mistake will compromise his future promotion prospects.

Required
Identify and explain the ethical issues arising in the above cases.

Answer

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Tags: Ethics, Financial Reporting, Financial Statements, ICAG, Integrity, Intimidation Threat, Objectivity, Professional Competence, Professional conduct, Self-Interest Threat
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting

AA – L2 – Q8 – Regulatory Framework for Auditing

Explain how legislation and IESBA Code ensure auditor independence at Apex Ventures. Discuss threats to auditor independence in three scenarios at Pinnacle Partners and suggest safeguards

Question

(a) State how legislation and the IESBA International Code of Ethics for Professional Accountants each seek to ensure the independence and objectivity of auditors at Apex Ventures.

(b) The following three situations have arisen in the audit firm of Pinnacle Partners:
(i) One of the partners, Mr. Thompson, and his wife, have been invited by the managing director of Summit Tiles, an audit client, to celebrate the company’s 20th anniversary with management over a long weekend at a beach resort. Mr. Thompson has been the engagement partner since incorporation of the company.
(ii) The firm has been approached and asked to accept appointment as auditors of Ridge Paints. One of the firm’s audit managers is company secretary of the company, although he takes no part in the management of the company. His parents are the directors and shareholders of Ridge Paints.
(iii) The directors of Crest Floors are unhappy with the level of fees charged by the firm. They are still refusing to agree an outstanding bill for taxation and advisory work and are demanding a reduction in the audit fee this year to match a quote they have received from another firm.

Required
Comment on the situations described above, recognising any threats to independence or objectivity, and suggesting what safeguards the firm should put in place to deal with such threats.

Answer

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Tags: Auditor Independence, Ethical Threats, Family Relationships, Fee Disputes Auditor Independence, Hospitality, IESBA Code, Legislation, Objectivity, Safeguards
Level: Level 2

Topic: Regulatory Framework for Auditing

Tag (SQ): Objectivity

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BMIS – L1 – SA – Q13.2 – Professional ethics in accounting and business

Defines the principle of objectivity for accountants.

BMIS – L1 – SA – Q13.1 – Professional ethics in accounting and business

Identifies principles expected of professional accountants in their work.

BMIS – L1 – Q9 – Professional ethics in accounting and business

Evaluate ethical issues in an accountant’s actions across four scenarios.

SCS – L3 – Q26 – Professional practice and codes of ethics

Advise Unity Aid on four fundamental principles for its code of ethics.

FR – L2 – Q9 – Professional and Ethical Issues in Financial Reporting

Identify ethical issues in two cases involving financial reporting decisions by ICAG accountants

AA – L2 – Q8 – Regulatory Framework for Auditing

Explain how legislation and IESBA Code ensure auditor independence at Apex Ventures. Discuss threats to auditor independence in three scenarios at Pinnacle Partners and suggest safeguards

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Tag (SQ): Objectivity

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BMIS – L1 – SA – Q13.2 – Professional ethics in accounting and business

Defines the principle of objectivity for accountants.

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BMIS – L1 – SA – Q13.1 – Professional ethics in accounting and business

Identifies principles expected of professional accountants in their work.

You're reporting an error for "BMIS – L1 – SA – Q13.1 – Professional ethics in accounting and business"

BMIS – L1 – Q9 – Professional ethics in accounting and business

Evaluate ethical issues in an accountant’s actions across four scenarios.

You're reporting an error for "BMIS – L1 – Q9 – Professional ethics in accounting and business"

SCS – L3 – Q26 – Professional practice and codes of ethics

Advise Unity Aid on four fundamental principles for its code of ethics.

You're reporting an error for "SCS – L3 – Q26 – Professional practice and codes of ethics"

FR – L2 – Q9 – Professional and Ethical Issues in Financial Reporting

Identify ethical issues in two cases involving financial reporting decisions by ICAG accountants

You're reporting an error for "FR – L2 – Q9 – Professional and Ethical Issues in Financial Reporting"

AA – L2 – Q8 – Regulatory Framework for Auditing

Explain how legislation and IESBA Code ensure auditor independence at Apex Ventures. Discuss threats to auditor independence in three scenarios at Pinnacle Partners and suggest safeguards

You're reporting an error for "AA – L2 – Q8 – Regulatory Framework for Auditing"

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