Suggested solution for assignment due Monday 04 April 2016
Q3.1.1 Discuss as to whether a professional accountant can disclose confidential information. (10)
ANSWER:
A professional accountant should not
* disclose confidential information acquired as a result of a professional or business
relationship, without specific authority or unless there is a legal or professional duty to
do so
* use confidential information acquired as a result of professional and business
relationships to their own personal advantage or the advantage of third parties.
- Professional accountants must maintain confidentiality in a social environment and must be alert to
the possibility of unintentionally disclosing confidential information to friends, long-term business
associates or a close family member (definition: parent, child or sibling), or an immediate family
member (definition: spouse or equivalent or dependent).
- A professional accountant should attempt to ensure that staff under his or her control and anyone
from whom advice or assistance is obtained in respect of an assignment, respect the duty of
confidentiality.
- If a relationship between a professional accountant, a client or employer ends, the duty of
confidentiality remains. (The principle also applies to information disclosed by a prospective client.)
Disclosure of confidential information is permitted when
* disclosure is permitted by law and is authorised by the client or employer (in the case of a
professional accountant in business)
* disclosure is required by law e.g.
- providing documents and other evidence in the course of legal proceedings
- disclosing infringements of the law to the appropriate public authority, including
Reportable Irregularities in terms of the Auditing Profession Act 2005
* there is a professional duty or right to disclose confidential information about a client, e.g.
- to comply with the requirements of an IRBA quality review (where the professional
accountant’s practice is being reviewed)
- in response to an enquiry or investigation by IRBA or SAICA
- to protect the professional interests of a chartered accountant in legal proceedings or
- to comply with technical standards or the requirements of the COPC.
Q3.1.2 What are the fundamental principles for professional behaviour of professional accountants?
(8)
ANSWER:
Integrity:
Professional accountants should be straightforward, honest, fair and truthful in their
professional and business relationship.
Professional accountants should not be associated with information they believe to be false
and misleading.
, Objectivity:
Professional accountants should not compromise their professional or business judgement
because of bias, conflict of interest or undue influence of others.
Professional Competence and Due Care:
Professional accountants are required to: maintain professional knowledge and skills,
maintain professional competence and remain abreast of relevant technical, professional
and business developments, act diligently (i.e. with due care) with the requirements of the
assignment, ensure appropriate training and supervision.
Confidentiality:
Professional accountant should not disclose confidential information acquired as a result of
professional or business relationship without specific authority unless compelled by legal or
professional duty.
Professional behaviour:
Professional accountants should comply with laws and regulations.
Avoid any action that may bring discredit to the profession.
Market and promote themselves in an honest and truthful manner.
Q3.1.3 List and describe the circumstances which can threaten compliance with the fundamental
principles of professional accountants. (10)
ANSWER:
Self-interest threats
Threats that a financial or other interest will inappropriately influence the chartered accountant’s
judgement or behaviour and lead him to act in his own self-interest.
Self-review threats
Threats that a chartered accountant will not appropriately evaluate the results of a previous service
performed by the chartered accountant or by another individual in his firm, on which the chartered
accountant will rely as part of a current service
Advocacy threats
Threats may arise when a chartered accountant promotes a client’s position to a point that his
subsequent objectivity may be compromised
Familiarity threats
Q3.1.1 Discuss as to whether a professional accountant can disclose confidential information. (10)
ANSWER:
A professional accountant should not
* disclose confidential information acquired as a result of a professional or business
relationship, without specific authority or unless there is a legal or professional duty to
do so
* use confidential information acquired as a result of professional and business
relationships to their own personal advantage or the advantage of third parties.
- Professional accountants must maintain confidentiality in a social environment and must be alert to
the possibility of unintentionally disclosing confidential information to friends, long-term business
associates or a close family member (definition: parent, child or sibling), or an immediate family
member (definition: spouse or equivalent or dependent).
- A professional accountant should attempt to ensure that staff under his or her control and anyone
from whom advice or assistance is obtained in respect of an assignment, respect the duty of
confidentiality.
- If a relationship between a professional accountant, a client or employer ends, the duty of
confidentiality remains. (The principle also applies to information disclosed by a prospective client.)
Disclosure of confidential information is permitted when
* disclosure is permitted by law and is authorised by the client or employer (in the case of a
professional accountant in business)
* disclosure is required by law e.g.
- providing documents and other evidence in the course of legal proceedings
- disclosing infringements of the law to the appropriate public authority, including
Reportable Irregularities in terms of the Auditing Profession Act 2005
* there is a professional duty or right to disclose confidential information about a client, e.g.
- to comply with the requirements of an IRBA quality review (where the professional
accountant’s practice is being reviewed)
- in response to an enquiry or investigation by IRBA or SAICA
- to protect the professional interests of a chartered accountant in legal proceedings or
- to comply with technical standards or the requirements of the COPC.
Q3.1.2 What are the fundamental principles for professional behaviour of professional accountants?
(8)
ANSWER:
Integrity:
Professional accountants should be straightforward, honest, fair and truthful in their
professional and business relationship.
Professional accountants should not be associated with information they believe to be false
and misleading.
, Objectivity:
Professional accountants should not compromise their professional or business judgement
because of bias, conflict of interest or undue influence of others.
Professional Competence and Due Care:
Professional accountants are required to: maintain professional knowledge and skills,
maintain professional competence and remain abreast of relevant technical, professional
and business developments, act diligently (i.e. with due care) with the requirements of the
assignment, ensure appropriate training and supervision.
Confidentiality:
Professional accountant should not disclose confidential information acquired as a result of
professional or business relationship without specific authority unless compelled by legal or
professional duty.
Professional behaviour:
Professional accountants should comply with laws and regulations.
Avoid any action that may bring discredit to the profession.
Market and promote themselves in an honest and truthful manner.
Q3.1.3 List and describe the circumstances which can threaten compliance with the fundamental
principles of professional accountants. (10)
ANSWER:
Self-interest threats
Threats that a financial or other interest will inappropriately influence the chartered accountant’s
judgement or behaviour and lead him to act in his own self-interest.
Self-review threats
Threats that a chartered accountant will not appropriately evaluate the results of a previous service
performed by the chartered accountant or by another individual in his firm, on which the chartered
accountant will rely as part of a current service
Advocacy threats
Threats may arise when a chartered accountant promotes a client’s position to a point that his
subsequent objectivity may be compromised
Familiarity threats
