Microsoft Word Audit Quality-Framework Final vs 20140214
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- Values, Ethics and Attitudes – National Level
| Appendix 2 44 30. Where internal resources may be limited, external technical resources may be available through their professional accountancy organizations, their relationships with other firms, or suitably resourced third-party organizations. 1.2.6 Robust Systems Exist for Making Client Acceptance and Continuance Decisions 31. Prior to accepting an audit engagement, and annually thereafter, it is important that audit firms consider whether they are competent to perform the engagement and have the capabilities and resources to do so. This includes whether the firm can comply with relevant ethics requirements. 32. While auditors need to apply professional skepticism, auditing also involves a degree of trust in management. Management lacking in integrity, by definition, cannot be trusted. Good client acceptance and continuance systems therefore evaluate whether there is information to suggest that client management lack integrity to the extent that it will not be possible to perform a quality audit. Having a rigorous client acceptance and continuance system is therefore important in helping an audit firm avoid engagements where there is a high chance of fraud or illegal acts, and thereby maintain a reputation for providing quality audits. 1.3 Values, Ethics and Attitudes – National Level 33. Key attributes are: Ethics requirements are promulgated that make clear both the underlying ethics principles and the specific requirements that apply. Regulators, national standard setters and professional accountancy organizations are active in ensuring that the ethics principles are understood and the requirements are consistently applied. Information relevant to client acceptance decisions is shared between audit firms. 1.3.1 Ethics Requirements Are Promulgated that Make Clear Both the Underlying Ethics Principles and the Specific Requirements that Apply 34. Ethics requirements may be imposed by law or regulations or mandated through professional accountancy organizations. The IFAC requires its member bodies to take actions to adopt and implement the IESBA Code in their jurisdictions, and to assist in its implementation, depending on the member bodies’ responsibilities in national environments. In some countries, the IESBA Code is supplemented by additional national requirements, and audit firms and public sector audit bodies may choose to impose higher requirements on their partners and staff. 35. Ethics requirements cannot address all possible situations. Therefore, auditors gain an understanding of both the requirements and the fundamental principles underlying them in order to understand how to apply them in practice. An understanding of how to apply the principles can be developed through internal communications within the audit firm, through coaching or on-the-job training, and through staff observing more experienced staff in action. |