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Dear tutor,
Under Code of Ethics, why undertaking reference checks of prospective candidates is prohibted? Isnt it simple administrative work as reference check emails are sent to previous employers and they confirm which is accordingly reported to management?
Thanks
It’s only prohibited for the positions of:
– a director or office of the entity; or
– a member of senior management in a position to extert significant influence over the accounting records/financial statements.At this level of recruitment there is more to reference checks than a box-ticking administrative exercise.
Ok. Understood. Thanks,
Business development advice is internal audit services?
Ok. Yeah it can also be categorised as “Business Relationships” so a blend of “Business Relationships” and “Internal audit services”.
Also, I am not sure about relationships of management threat, advocacy threat and legal proximity. Mostly they are together in ACCA answers. For example, if auditor accompany audit client to a meeting with bank to discuss about getting finance, then there will be management threat. Advocacy and auditor libaility will also arise as auditor promotes the position of the client such that objectivity is compromised.
Thank you so much.
See page 24 of the notes “management threats are not a separate category”.
Please see what I have written about “management threat” on these posts:
https://opentuition.com/topic/isa-june-2013-spaniel-potential-familiarity-threat
https://opentuition.com/topic/bpp-revision-kit-q3-becker-self-review-threatOk thank you so much !
I am not sure when to write about “auditor liability”. Is it part of ethics?
No it’s not part of ethics but a separate, though not unrelated topic. Please DO take a minute to download the notes https://opentuition.com/acca/aaa – you can see immediately from the contents that it is Chapter 7.
Ethics tells you that “professional competence and due care” is a fundamental principle – if the auditor is incompetent he may be liable for breach of contract (to the audit client) or for negligence in tort .
No it’s not part of ethics but a separate, though not unrelated topic. Please DO take a minute to download the notes https://opentuition.com/acca/aaa – you can see immediately from the contents that it is Chapter 7.
Ethics tells you that “professional competence and due care” is a fundamental principle – if the auditor is incompetent he may be liable for breach of contract (to the audit client) or for negligence in tort .
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