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1、Chapter 4Professional Ethics4-1 (Objective 4-1) What are the six core ethical values described by the Josephson Institute? What are some other sources of ethical values?The six core ethical values described by the Josephson Institute are:1. Trustworthiness 4. Fairness2. Respect 5. Caring3. Responsib
2、ility 6. CitizenshipThere are many other potential sources of ethical values, including laws and regulations, church doctrines, codes of professional ethics, and individual organizations codes of conduct.4-2 (Objective 4-2) Describe an ethical dilemma. How does a person resolve an ethical dilemma?An
3、 ethical dilemma is a situation that a person faces in which a decision must be made about the appropriate behavior. There are many possible ethical dilemmas that one can face, such as finding a wallet containing money, or dealing with a supervisor who asks you to work hours without recording them.A
4、n ethical dilemma can be resolved using the six-step approach outlined on p. 76 of the text. The six steps are:1. Obtain the relevant facts.2. Identify the ethical issues from the facts.3. Determine who is affected by the outcome of the dilemma and how each person or group is affected.4. Identify th
5、e alternatives available to the person who must resolve the dilemma.5. Identify the likely consequence of each alternative.6. Decide the appropriate action.4-3 (Objective 4-3) Why is there a special need for ethical behavior by professionals? Why do the ethical requirements of the CPA profession dif
6、fer from those of other professions?There is a special need for ethical behavior by professionals to maintain public confidence in the profession, and in the services provided by members of that profession. The ethical requirements for CPAs are similar to the ethical requirements of other profession
7、s. All professionals are expected to be competent, perform services with due professional care, and recognize their responsibility to clients. The major difference between other professional groups and CPAs is independence. Because CPAs have a responsibility to financial statement users, it is essen
8、tial that auditors be independent in fact and appearance. Most other professionals, such as attorneys, are expected to be an advocate for their clients.4-4 (Objective 4-4) List the four parts of the Code of Professional Conduct, and state the purpose of each.PART PURPOSE1. Principles of Professional
9、 Conduct1. Provide ideal standards of ethical conduct and help practitioners understand the ideal conduct of a CPA.2. Rules of conduct 2. Provide minimum standards of ethical conduct stated as specific rules.3. Interpretation of the rules of conduct3. Provide formal interpretations of the rules of c
10、onduct to answer questions that frequently arise about the rules of conduct.4. Ethical rulings 4. Provide more detailed guidance to practitioners about interpretation of the rules of conduct for less commonly raised questions.4-5 (Objective4-5) Distinguish between independence of mind and independen
11、ce in appearance. State three activities that may not affect independence of mind but are likely to affect independence in appearance.Independence in fact exists when the auditor is actually able to maintain an unbiased attitude throughout the audit, whereas independence in appearance is dependent o
12、n others interpretation of this independence and hence their faith in the auditor.Activities which may not affect independence in fact, but which are likely to affect independence in appearance are: (Notice that the first two are violations of the Code of Professional Conduct.)1. Ownership of a fina
13、ncial interest in the audited client.2. Directorship or officer of an audit client.3. Performance of management advisory or bookkeeping or accounting services and audits for the same company.4. Dependence upon a client for a large percentage of audit fees.5. Engagement of the CPA and payment of audi
14、t fees by management.4-6 (Objective 4-5) Why is an auditors independence so essential?Independence in auditing means taking an unbiased viewpoint. Users of financial statements would be unlikely to rely on the statements if they believed auditors were biased in issuing audit opinions.4-7 (Objective
15、4-5) What consulting or nonaudit services are prohibited for auditors of public companies? What other restrictions and requirements apply to auditors when providing non audit services to public companies?Auditors of public companies are prohibited from performing the following nonaudit services:1. B
16、ookkeeping and other accounting services2. Financial information systems design and implementation3. Appraisal or valuation services4. Actuarial services5. Internal audit outsourcing6. Management or human resource functions7. Broker or dealer or investment adviser, or investment banker services8. Legal and expert services unrelated to the audit9. Any other service that the PCAOB determines by regulation is impermissibleNonaudit services that are not prohibited by the Sarbanes
