Essay Example on Revised IESBA Code of Ethics: Assuring Trustworthy Businesses

Impacts of the Revised Code of Ethics by IESBA

Firstly, people engaging in business need assurance that whatever they want to invest in is free from fraud and other errors that might lead them to losses ("International Code of Ethics for Professional Accountants: Key Areas of Focus for SMEs and SMPs," n.d). To ensure this does not happen he or she is required to hire an auditor. Involvement of an auditor, in this case, is to ensure that he or she provides a piece of professional advice to a client that is unbiased which is according to GAAD. Due to increased rates of frauds associated with financial accounting, Congress came up with Sarbanes Oxley act of 2002. It is this that led to the building of public company oversight board to have a look at the audits from various public companies, and it was nonprofit. Apart from that, PCAOB also took charge of the reviews from the dealers and brokers which also included the reports of compliance.

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PCAOB consisted of five members who were appointed to serve for a term of five years by the Sec who also has the power of oversight which includes board rules approval, budget and the standards of living. Apart from that, SOX was funded by Dodd-Frank Act which ensured that PCAOB acquired the funds to carry out its activities that involved assessment of companies owned publicly and brokers among other issuers (Crawford et al, 2014, p.69). Apart from that public company report was to be accompanied by the assessment of the company itself regarding its control on the statement of finance and auditors final say. However, there are various opinions which auditor may issue depending on what he or she thinks.

Opinions come up due to the risks that the firm may encounter when running the business and various ways through which the firm may counter these risk. When these risks are weighed depending on multiple methods to counter them, then the auditor can determine whether financial statement represented by the firm are fair or not. One of the opinions is unqualified in which all report from finance is appropriate if there is respect in all materials regarding the position in the capital used, operations results and how money flows in the firm agrees to the GAAP (Needles, Kantor & Shoenthal, 1992, p.218). Mainly it is included in the standard report. Another form of opinion is the qualified one which highlights on the financial statement represented being fair in any case positions of finance used on the material, operation reports and the flow of cash agree with GAAP except for qualification matters. In the case of adverse opinion, it comes in when reports from finance are not fare and do not much what is required by GAAP while disclaimer opinion, on the other hand, states that the auditor does not offer any advice concerning the reports of finance.

Apart from that when it comes to the public companies management, SOX requires the administration to come up with a framework that allows them to have control internally and give out the report on its effectiveness annually. In most cases, the Committee of Sponsoring Organization of the Treadway Commission (COSO) provides an internal framework that are widely used by various firms. COSO mainly ensures that a firm improves in the form of performance and how it is managed through provision of internal control that allows the firm to be able to detect frauds and other errors that may come up. Internal inspection of the firm facilitates to its success through regulation of the risk that the firm encounters (Eltweri, 2015). To acquire an entity that is effective the director comes up with a judgment that is integrated, dynamic and generally responds to what the company needs.

Areas to the Code of Ethics

However, there are specific areas to the code of ethics that are used in auditing to produce results that are fair and just. They include the integrity, competence in the job with the care that is required, behaviors should be professional, confidentiality and objectivity (Lee, Pittroff & Turner, 2018, p.14). These build up the expected behavior of the professional accountant. Apart from that, these basic principles include various threats related to them which are intimidation, self-interest, familiarity, and self-review. In the case of rebuilding and revision of the international code of ethics, these together with the application of a framework that matches the basic principles were not changed. In addition to that, general revision of the law involved a long association of the firm or an individual with the auditors to make provision of independence strong. Apart from that make offering and inducement acceptance reliable, improve PIABs, make PIAB provision to PAPPs clear, develop new materials that will make one comprehend the need for facts and circumstances when developing the judgment to make, a new way of enhancing people to know to adhere to the basic principles of auditing creates professionalism and enhanced framework.

Revised Code of Ethics Issued by IESBA to Professional Accountants

In the conceptual framework, all professional accountants are supposed to deal with issues of independence and ethics. Here it illustrates the steps that are involved in the approach that include evaluation, identification, and views on threats about fundamental principles. An extensive revision has been done on this which includes requirements such as the PA getting into thoughts of the report represented before coming up with the conclusion. In the case where the community had ideas that some of the safeguards were not clear, it established firm answers that people got to comprehend. For instance, a PA, whether individually or in collaboration, he or she should take an action that ensures all threats associated with the firm are less to match the basic principles of the level of acceptance (Lassar, 2013). Apart from that, it highlights the threats which should be dealt with by clearing the instance that built the risk, applying the safeguards to contain them or ending a particular activity in the firm.

On the other hand, it also issues ways through which recruitment should be done and specifies the services of recruitment that network firms and other companies are not supposed to offer to their auditors. This, therefore, facilitated to a more clear report from various firms since through this kind of the framework the auditor can tackle all the threats that the firm may encounter. Nonetheless, it enables one to come up with a transparent and cost-effective way to handle these threats thus developing a judgment on the final report that is fair and does not favor or undermine the firm.

When it came to the long association, there was a change in the case of the firm and auditor or the client offering long assurance relationship in the provision of independence. It included interchange of the audits with entities of interest for the public which was strengthened. Through this, therefore, it meant that most of the client offering assurance to the firm would have a long time with the firm giving him or her time to know how the firm operates coming up with clear judgment for the final report before being interchanged with another auditor. In this case, the overseer can collect reports from different auditors but in the same firm allowing him or her be able to identify whether the reports add up. Therefore this enhances integrity in that different auditors will be able to cover details that their predecessor did not cover resulting in the final report that will be fair and just. This will also ensure that various firms work effectively to achieve their goals as multiple auditors will come with different and effective ways of handling threats they face improving their profits.

Another part that was revised and rebuilt was the one involving inducements in various firms. The revised codes go ahead to explain what it means when it comes to incentive and goes ahead to elaborate limits that a firm must pass through before accepting inducements (Allen, 2018, p.44). Apart from that it also covers the PAIBs and PAPPs behavior when it comes to the case of incentive. However, there is the situation that disallows giving out and receiving of the inducement given the case if it influences the person receiving or another individual improperly. It helps provide an ethical defense that is associated with errors done by the firm or where the PA is involved in behaviors that are not ethical. Through this, it means it will be difficult for the corrupt auditors to operate as it is prohibited and he or she may be easily caught thus performing good by providing the right and accurate report.

PAIB provision, however, was not left out. In this case, one finds out that PAIBs whether in little or entities that are big, play a role that is important when it comes to the chain of supply reports and provision of governance in the company that is effective. Therefore according to interest from the public, it was necessary to strengthen the provision of PAIBs. Some of the changes that were made included the act of being open and discrete when it came to providing information that may end up misleading the outcome and should be accompanied by a material of application which will help the PA not to engage himself or herself with the information. Apart from that, there was the instance where pressure can lead to breaking of basic principles. Here there is the provision of examples when the PA may encounter pressure forcing an individual not to adhere to the basic principles. The main aim of this was to ensure that all PAs use the conceptual framework in a way that they can achieve their goals within the organizations they are employed.

In the process of revising and rebuilding of the international code of ethics, there was clearance in the provision of PAIB applicability to PAPPs. It was since IESBA had a belief that PAPPs endured similar problems associated with PAIBs. Therefore whether as contractors, owners or people employed by the company when it comes to performing activities for the professional firm he or she should be keen on the ability of PIABs provisions to be applied to PAPPs. That is PAPPs which is the PAs and companies that offer services that are professionals when they experience problems that resembles one of PAIBs; the auditor can identify efficiently and see if two instances are applicable in which they will work. It creates room for the auditors to way the results and see how to go about the matter and make a clear judgment when it comes to the findings regarding the company capital.

Conclusion

Therefore, from what one has learned above, he or she may conclude that proper code of ethics when necessary when it comes professional accountants who run various business. Therefore fro...