B4555 - Chapter 19

Ethics

A system or code of conduct based on moral duties and obligations that indicate how an individual should interact with others in society.

Professionalism

The conduct, aims, or qualities that characterize a profession or professional person.

Utilitarianism

A theory of ethical behavior that focuses on the consequences and trade-offs between the benefits and burdens of alternative actions.

Rights-based approach

A theory of ethical behavior that assumes individuals have certain rights and others have a duty to respect those rights when making decisions.

Justice-based approach

A theory of ethical behavior that is concerned with issues such as equity, fairness, and impartiality.

Professional behaviour

In carrying out their responsibilities, members should conduct themselves in a manner that maintains the good reputation of the profession.

Integrity and due care

Members should perform all professional responsibilities with the highest sense of integrity and observe the profession's technical and ethical standards.

Objectivity

Members should maintain objectivity and be free of conflicts of interest when discharging professional responsibilities.

Professional competence

Members should strive to improve competence and the quality of services by staying current on developments in their professional field.

Confidentiality

Members should protect confidential information acquired in providing services and establishing business relationships.

Independence

Members in public practice should be independent in fact and appearance when providing auditing and other assurance services.

Maintenance of the good reputation of the profession

Members should act in a manner that maintains the good reputation of the profession and its ability to serve the public interest.

Compliance with professional standards

Members should perform professional services in accordance with generally accepted standards of practice of the profession.

Duty to report breach of the CPA Rules

Members should promptly report any information concerning a breach of the rules of professional conduct or raising doubt as to the competence, reputation, or integrity of the profession.

Handling property of others

Members should not receive, handle, or hold money or other property as a trustee, receiver, guardian, or liquidator, except in accordance with the terms of the engagement and the law.

Unlawful activity

Members, students, or firms should not knowingly associate with any unlawful activity.

Retention of documentation and working papers

Members should retain working papers, records, or other documentation that reasonably evidence the nature and extent of work done in respect of any professional engagement for a reasonable period of time.

Integrity and due care

Members, students, or firms should perform professional services with integrity and due care.

Objectivity

Members or students should perform their professional services with an objective state of mind.

Independence

Members in public practice should be independent in the performance of professional services as required by standards promulgated by regulatory bodies.

Prohibited Financial Relationships

Members should not have direct or material indirect financial interests in entities associated with assurance entities, except for certain exceptions.

Prohibited Business Relationships

Independence is impaired if a CPA performs a managerial or other significant role for an entity's organization during the time period covered by an assurance engagement.

Effect of Family Relationships

Independence is impaired if a covered member's immediate family has a financial interest in an audit client or could exercise significant influence over the financial or accounting policies of the entity.

Effect of Actual or Threatened Litigation

Independence is impaired if litigation is commenced by management alleging deficiencies in audit work or if there is an expressed intention to commence litigation against the CPA alleging deficiencies in audit work.

Provision of Non-Assurance Services

The types of non-audit services that can be provided to assurance entities are restricted by the CPA Rules of Professional Conduct.

Independence Requirements for Audits of Public Companies

The rules for audits of public companies are predicated on four basic principles of auditor objectivity and independence.

Accounting Principles

A member should not express an opinion or state affirmatively that the financial statements or other financial data of any entity are presented in conformity with GAAP if there is a departure from an accounting principle promulgated by bodies designated by provincial securities commissions.

Confidential Client Information

A member in public practice should not disclose any confidential information without the specific consent of the client, except in certain specified situations.

Contingent Fees

A member should not perform professional services for a contingent fee for certain types of engagements.

Commissions and Referral Fees

A member should not receive commissions or referral fees for certain types of engagements, and if they do, they should disclose that fact to the client.

Advertising and Other Forms of Solicitation

A member in public practice should not seek to obtain clients through advertising or other forms of solicitation that are false, misleading, or deceptive.

Solicitation

The act of coercing, over-reaching, or harassing conduct by the user, which is prohibited.

Prohibited Advertising

Creating false or unjustifiable expectations of favorable results or implying an ability to influence any court, tribunal, regulatory agency, or similar body or official.

Fee Misrepresentation

Claiming that specific professional services will be performed for a stated fee, estimated fee, or fee range when it is likely that such fees will be substantially increased without informing the prospective entity.

Misleading Firm Name

A member shall not practice public accounting under a firm name that is misleading.

Inclusion of Past Partners

Names of one or more past partners may be included in the firm name of a successor organization.

Descriptive Style

The practice of public accounting shall be carried on under the descriptive style of either "chartered professional accountant(s)" or "public accountant(s)," unless it forms part of the firm name.

Disciplinary Actions

The Professional Conduct Committee can direct a member to take remedial or corrective action, including expulsion or suspension of membership.

Quality Control Standards

CPA firms are required to implement policies and procedures to monitor their practices and ensure adherence to professional standards.

CSQM-1

Quality management standard for firms performing audits, reviews of financial statements, or other assurance or related services engagements.

CSQM-2

Engagement quality review standard.

Elements of Quality Control

The firm's risk assessment process, resources, relevant ethical requirements, governance and leadership, engagement performance, acceptance and continuance of relationships, monitoring, and information and communication.

CPAB Inspections

The CPAB conducts regular inspections of public accounting firms that are required to register with the Board.