Describe The Professional Ethics And Auditors Accounting Essay

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Professional Ethics is partly included of what a professional can or can not do in the work place. It also includes a much greater part of the professional's life. If a professional is to have ethics then that person needs to adopt and conduct in all of his actions. Computer Societies around the world such as the

Institute of Electrical and Electronics Engineers (IEEE) and national bodies in Australia, Singapore, the UK and other countries have on their websites professional codes of ethics to consider and approach in the way professionals conduct themselves in and out of the work place. Things that are included are concepts like: professional respect, avoidance of dishonest or fraudulent activity such as collusion and the professional development of the individual. Another aspect of this is strengthening of the profession and the industry within which the professional works. This concerns a professional's ethics and behaviour while carrying out their professional work and is good of the community and mankind.

What are the problems of today's ethics? (Professional independence)

Problems of today's ethics are usually connected with the professional independent issue. The auditor must be independent or appear to be independent in order to create assurance regarding financial statements towards firm's users.

Definition :

Independence means that one parties is not controlled or influenced by other parties in matter of opinion. It is also not subject to another's authority as independence. It is said that 2 parties should be independent if neither has any other responsibility to the other.

IFAC Code of Ethics for Professional Accountants identifies two different categories of independence (Eilifsen et al., 2009, Auditing and Assurance Services: Second European Edition):  

Independence of mind:

The auditor's needs to be in a state of mind that allows them to express opinions about the audited without feeling that they are under pressure due to independence issues and feel that they are allowed to act with integrity, conducting their audits objectively and with professional skepticism. Independence of mind is also referred to as "independence in fact".

Independence in appearance:

Independence in appearance relates to a third party's perception regarding the auditor's independence. If the third party doesn't think that the auditor appears to be independent, even though the auditor is independent in his mind, the third party don't trust the auditor due to certain circumstances or relationships which are incompatible with independence and the promise of the assurance that the auditor is supposed to provide is lost.

Why is ethics necessary in auditing? (Prevent ethical threats)

The auditor independence is threatened by the different kinds of pressures that exists and influences the auditor's ability to remain objective.

These threats may classify to these five types:

Self-interest threats

This threats arise when an auditor acts in his or her own interest or personal financial reward or other personal self-interest and rather than performing an unbiased audit. A concrete example would be an auditor owning stock in the client company, auditor's business relationship with an auditee or auditor's family relationship with the auditee.

Self-review threats

The threat of bias exists when an auditor evaluating his or her own work or the work of a previously the colleague is responsibility. This treats appear when the auditor offers non audit services, accounting services or auditor audit his own work to the client. For example, business decisions or data being subject to review and justification by the same person responsible for making those decisions or preparing those data.

Advocacy  threats

 The threat that occurs when an auditor acts as an advocate for or against an audit client's position or opinion rather than as an unbiased attestor. This threats arise if the auditor has promoted or advocated for or against the auditee. For example, auditors promotes shares of an client or auditors acting as an behalf of client in litigation case.

Familiarity (or trust) threats

The threat arise when the auditor have a close relationship with the client, this threat may stem from auditors having a close personal relationship or a long-standing business relationship with the client causing them to lose objectivity.

Intimidation threats

The threat that arises when an auditor is being, or believes that he or she is being, overtly or covertly coerced by an audit client or by another interested party. For example, if the audit firm is threatened with replacement because of a disagreement about the application of an accounting principle.

How do we measure if it is ethical in audit? (Principles of Ethics "C.O.B.I.C.")

A professional auditors can be measured by the following basic principles of this Code of Ethics: [Ref: Section 100.4 of the Code of Ethics for auditors]


A professional auditor should not merely honesty but fair dealing and truthfulness in all business and professional relationships. The integrity of auditors builds trust and provides the basis for reliance on their judgment. Integrity requires auditors to observe both the form and spirit of auditing standards and also requires auditors to observe the principles of independence, objectivity, standards of professional conduct, and absolute honesty in their auditing work.


A professional auditor should not allow undue influence of others, bias, or conflict of interest to lay over professional or business judgments. Auditors must show the highest level of professional objectivity in gathering, evaluating and communicating information about the audit activities. They must make a balanced evaluation of all the relevant circumstances and are not to be unduly influenced by their own interests or by others when making any judgments. It is essential that auditors are independent and impartial, not only in tangible but also in appearance.

Professional competence and due diligence

A professional auditor has a continuing responsibility to maintain professional knowledge and skills at the level required to ensure that a client or employer receives competent professional service. A professional accountant should act diligently and on the basic with the technical and professional standards in providing professional services.


A professional auditor should maintain confidentiality of information as a result of professional and business relationships and will not disclose any information to outside the firm, orally or in writing, without appropriate authority and unless a legal or professional duty or right to disclose. This information should not be used for the personal interest of a professional accountant.

Professional Conduct

A professional auditor should comply with courtesy and consideration towards all with whom they came into contact during performing their professional works and follow the laws and regulations and should avoid any action that discredits the profession.