STUDY_GUIDE_001_AUE2601.pdf

In this learning unit, the ethical principles regulating the auditing and accountancy profession are explained and applied by reference to the International Federation of Accountants (IFAC) Code of Ethics for Professional Accountants, the South African Institute of Chartered Accountants (SAICA) Code of Professional Conduct for Chartered Accountants and the Independent Regulatory Board for Auditors (IRBA) Code of Professional Conduct for Registered Auditors. The acts or omissions which may constitute improper conduct on the part of the registered auditor are described with reference to the IRBA Rules regarding Improper Conduct. The ethical principles governing the conduct of auditors belonging to the profession are summarised in three principal sources, namely the SAICA Code of Professional Conduct for Chartered Accountants, the IRBA Code of Professional Conduct for Registered Auditors and the IRBA Rules regarding Improper Conduct, all of which are contained in Volume 2B of the SAICA Student Handbook. You will probably feel somewhat confused when we mention all the above Codes of Conduct, because many of you may never have heard of them. Keep in mind that a person who is registered with the SAICA is a “chartered accountant”, but unless he or she is also registered with the IRBA, he or she is not a “registered auditor”. A person registered with both the SAICA and the IRBA is therefore a “chartered accountant” and a “registered auditor”. The relevant documents can be downloaded from the following links:  The SAICA Code of Professional Conduct for Chartered Accountants:  The IRBA Code of Professional Conduct for Registered Auditors; and  The IRBA Rules regarding Improper Conduct: Study the diagram below and read through the following paragraphs to familiarise yourself with the different Codes of Conduct (the IFAC, the SAICA and the IRBA): AUE2601/1 49 | Page Diagram 1: Illustration of the various bodies responsible for regulation of the ethics of the profession Profession South Africa SAICA For all CA(SA)’s SAICA Code of Professional Conduct Adopted Parts A & B of the IRBA's Code Adopted Part C of the IFAC code Minor amendments IRBA For Registered auditors only IRBA  IRBA Code of Professional conduct Parts A and B(modified IFAC code of conduct for jurisdiction in SA) IRBA’s Rules regarding Improper Conduct International IFAC IFAC Code of Ethics for Professional Accountants Parts A,B,C 50 | Page The SAICA Code of Professional Conduct for Chartered Accountants, as set out in Volume 2B of the SAICA Student Handbook The IFAC Code of Ethics for Professional Accountants consists of three parts: Part A – General Application of the Code Part B – Professional Accountants in Public Practice Part C – Professional Accountants in Business The SAICA Code of Professional Conduct for Chartered Accountants (see SAICA Student Handbook, Volume 2B), which was revised and became effective on 1 January 2014, conforms to the IFAC Code of Ethics for Professional Accountants and is consistent in all material respects with the IFAC Code of Ethics for Professional Accountants for Parts A, B and C, except for minor amendments to accommodate terminology and jurisdictional requirements specific to South Africa. The SAICA Code of Professional Conduct for Chartered Accountants and definitions are also consistent in all material respects with the IRBA Code of Professional Conduct for Registered Auditors for Part A and Part B. The SAICA has replaced references to “professional accountants” in the IFAC Code with a reference to “chartered accountants” as the SAICA regulates individual chartered accountants in South Africa. The IRBA Code of Professional Conduct for Registered Auditors, as set out in Volume 2B of the SAICA Student Handbook The IRBA Code of Professional Conduct for Registered Auditors is applicable to members engaged in public practice as Registered Auditors (RAs). The IRBA has adopted Parts A and B, and the related definitions contained in the IFAC Code in their entirety, because these relate to professional services provided by registered auditors. Part C of the IFAC Code has not been adopted, since it provides for ethical conduct of Professional Accountants in businesses who are not registered auditors. The IRBA has included a few requirements in the Code and incorporated them into the relevant sections in Parts A and B. The IRBA has also replaced references to “professional accountants” in the IFAC Code with a reference to “registered auditors”, since the IRBA regulates individual registered auditors and registered audit firms in South Africa. The adoption of the IFAC Code of Ethics for Professional Accountants by both the SAICA and the IRBA contributes to the worldwide convergence of ethical standards. It is anticipated that this convergence will facilitate the implementation of the Code by chartered accountants and registered auditors in South Africa. The IRBA Rules regarding Improper Conduct as set out in Volume 2B of the SAICA Student Handbook The IRBA Rules regarding Improper Conduct provide the registered auditor with a list of acts or omissions which could constitute improper conduct and which are punishable in terms of the provisions of the Act and Disciplinary Rules. AUE2601/1 51 | Page 2.3.1 The SAICA Code of Professional Conduct for Chartered Accountants Parts A and B of the SAICA Code of Professional Conduct for Chartered Accountants apply to chartered accountants in public practice and Parts A and C to chartered accountants in business. Note: In our discussion of Parts A and B of the SAICA Code of Professional Conduct for Chartered Accountants and the IRBA Code of Professional Conduct for registered auditors hereafter, our reference to an auditor or auditors implies a person registered with both the SAICA and the IRBA. These auditors are therefore chartered accountants and registered auditors. 2.3.1.1 Definitions and Part A (section 100–150): General application of the Code Study  Jackson & Stent (2016:2/5–2/12)  SAICA Student Handbook, Volume 2B, SAICA Code of Professional Conduct: Definitions and Part A (section 100−150) Note the following in the study resources above:  the meaning and definitions of words referred to in the SAICA Code of Professional Conduct for Chartered Accountants