Which of the following is prohibited by the Code of Ethics for professional Accountants in the Philippines?

AUDITING THEORY CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS IN THE PHILIPPINES (with Multiple Choice Questions)

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Code of Ethics for Professional Accountants in the Philippines: The Code of Ethics for CPAs in the Philippines is the document that contains the norms and principles governing the practice of the accountancy profession in the highest standards of ethical conduct. Preface to the Code of Ethics: Based on the revised Code of Ethics developed by the International Federation of Accountants (IFAC), with certain modifications Approved by the Board of Directors of PICPA and recommended for adoption by the BOA Adopted by the BOA and approved by the PRC as part of the rules and regulations of the BOA for the practice of the accountancy profession Sets the fundamental principles and provides guidance as to the application of such fundamental principles to typical situations Compliance with the Code is mandatory for all CPAs and is applicable to all professional services performed in the Philippines In case of noncompliance: Failure to comply with Code may result in an investigation into the CPAs conduct. When provision of the Code is in conflict with Philippine statutory requirement the Philippine statutory requirement shall prevail. Reasons why the Code was adopted: a. To ensure the highest quality of performance; and b. To maintain public confidence in the profession Parts of the Code of Ethics: 1. Part A general application of the Code and it applies to all professional accountants Part A establishes the fundamental principles of professional ethics for professional accountants and provides a conceptual framework that serves as a guide for applying those principles 2. Part B applies to professional accountants in public practice 3. Part C applies to professional accountants in business Fundamental Principles: The fundamental principles are the basic ethical requirements which are required to be observed and complied with by professional accountants in order to achieve the objectives of the accountancy profession. 1. Integrity A professional accountant should be straightforward and honest in all professional and business relationships. Integrity implies not merely honesty but also fair dealing and truthfulness. To maintain integrity, a professional accountant should avoid association with information (reports, returns, communications and other information) that contains materially false, incomplete or misleading information or information that contains statements or information furnished recklessly 2. Objectivity A professional accountant should not allow bias, conflict of interest or undue influence of others to override or compromise his professional or business judgment. Objectivity is a combination of impartiality, intellectual honesty and a freedom from conflicts of interest. Relationships that bias or unduly influence the professional judgment of the professional accountant should be avoided. 3. Professional competence and Due care: knowledge and skill at the level required to ensure that a client or employer receives competent professional service. Competent professional service requires the exercise of sound judgment in applying professional knowledge and skill in the performance of such service. Two phases of professional competence: a. Attainment of professional competence: A professional accountant should have

a. Professional competence. A professional accountant has a continuing duty to maintain professional

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initially a high standard of general education, followed by specific education, training, examination, and work experience b. Maintenance of professional competence: A professional accountant has a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques. The maintenance of professional competence requires a continuing awareness and an understanding of relevant technical professional and business developments. Continuing professional development develops and maintains the capabilities that enable a professional accountant to perform competently within the professional environments. Professional accountants should not portray themselves as having expertise or experience they do not possess.

b. Due care. A professional accountant should act diligently and in accordance with applicable technicaland professional standards when providing professional services. In addition, CPAs should conform with the technical and professional standards of the following: Board of Accountancy (BOA) / Professional Regulation Commission (PRC) Securities and Exchange Commission (SEC) Financial Reporting Standards Council (FRSC) Auditing and Assurance Standards Council (AASC) Relevant legislation

Diligence encompasses the responsibility to act in accordance with the requirements of an engagement, carefully, thoroughly and on a timely basis. 4. Confidentiality: A professional accountant should: relationships

a. Respect the confidentiality of such information acquired as a result of professional and business b. Not disclose any such confidential information to third parties without proper and specific authoritythere is a legal or professional right or duty to disclose.

c. Not use such confidential information to the his personal advantage or the advantage of third parties(or to the disadvantage of the client or employer) Confidentiality also requires taking all reasonable steps to ensure that staff and persons (such as experts) from whom advice and assistance are obtained respect the CPAs duty of confidentiality. A CPA should maintain confidentiality of information: a. Even in a social environment b. Even after the end of relationships between a CPA and a client or employer c. Even for information disclosed by a prospective client or employer d. Even within the firm or employing organization Circumstances where disclosure by a CPA is allowed: 1. When disclosure is permitted by law and authorized by the client/employer; 2. When disclosure is required by law: a. To produce documents or to give evidence in the course of legal proceedings; or b. To disclose to the appropriate public authorities infringements of the law that come to light 3. When there is a professional duty or right to disclose, when not prohibited by law: a. To comply with the quality review of a member body or professional body b. To respond to an inquiry or investigation by a member body or regulatory body c. To protect the professional interests of the CPA in legal proceedings, or d.To comply with technical standards and ethics requirements 5. Professional behavior: A professional accountant should comply with relevant laws and regulations and should avoid any action that discredits the profession. Professional behavior requires a professional accountant to: a. Act in a manner consistent with the good reputation of the profession, and b. Refrain from any conduct/action that may bring discredit to the profession Independence:

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In an assurance engagement, members of assurance teams, firms and, when applicable, network firms be independent of assurance clients. Conceptual approach to independence requires: 1. Independence of Mind (in fact) The state of mind that permits the expression of a conclusion without being affected by influences that compromise professional judgment, allowing an individual to act with integrity, and exercise objectivity and professional skepticism. 2. Independence in Appearance The avoidance of facts and circumstances that are so significant that a reasonable and informed third party, having knowledge of all relevant information, including safeguards applied, would reasonably conclude a firms, or a member of the assurance teams, integrity, objectivity or professional skepticism had been compromised. The Code of Ethics does not only require the professional accountants to maintain independence in mental attitude because professional accountants are required to avoid situations that would lead the public to doubt their independence.

Independence does not mean that a person exercising professional judgment ought to be free from all economic, financial and other relationships. It means free from significant economic, financial and other relationships. The independence requirements depend on the following: a. Assurance client independence is required b. Non-assurance client independence is not required Independence requirements for assurance engagements: Type of Assurance Engagement Required to be independent of the client Assurance team, firm and network firms Assurance team and firm Assurance team and firm have no material financial interest

Audit Non-audit not restricted for use by identified users Non-audit restricted use by identified users

Categories of Threats to Compliance with Fundamental Principles: Compliance with the fundamental principles may potentially be threatened by a broad range of circumstances or relationships. Many threats fall into the following categories:

1. Self-interest threats may result from financial or other interests of a CPA or of an immediate orclose family member Financial interest an interest in an equity or debt security (debenture, loan or other debt instrument) of an entity a. Direct financial interest a financial interest owned directly and under the control or beneficially owned and under the control b. Indirect financial interest if beneficially owned but the individual or entity has no control Immediate family a spouse or dependent Close family a parent, non-dependent child or sibling Examples of self-interest threats for a CPA i

What are the Code of Ethics for Professional Accountant in the Philippines?

Which of the following is the Ethics of professional accountants?

Which of the following may be considered by a professional accountant to eliminate or reduce identified threats to an acceptable level?

What are the 5 codes of ethics?