Ethics and Governance · Module 2: Ethics
The Ethics Toolkit
Chapters
- Case
- Principles
- Threats
- Framework
- Recap
In short
APES 110 asks a professional accountant to identify threats to the five fundamental principles, evaluate whether they are at an acceptable level, and address them. An audit manager who owns shares in the client faces a self-interest threat to objectivity, which is addressed by removing the interest or the person, not by ignoring it.
- Five principles: integrity, objectivity, professional competence and due care, confidentiality, professional behavior.
- Five threats: self-interest, self-review, advocacy, familiarity, intimidation.
- Conceptual framework: identify, evaluate, address.
Transcript
Case
Meet Sarah. She's an audit manager in Sydney. Her client: Koala Mining. Her portfolio: $5,000 of its shares. Watch her objectivity. Something's off. Which threat is this? Pause and pick one.
Principles
Ethics rests on five principles. Integrity and Objectivity come first. Then Competence & Due Care, and Confidentiality. Professional Behaviour completes the five pillars.
Threats
Five threats can crack them. Remember S · S · A · F · I. Each is a situation to spot, not a crime. Sarah gains if Koala looks good. That's Self-interest. And it cracks the Objectivity pillar.
Framework
Every threat goes through three steps. Identify. Evaluate. Then address it. For Sarah: sell the shares, or step off the audit.
Recap
Screenshot this. It's the whole episode.
Sources
- APES 110 Code of Ethics for Professional Accountants, Part 1 and section 120
Free lessons in other subjects
- Which Side Goes Up? · FoA
- What Makes Numbers Useful · FAR
- The $2,500 Overhead Gap · MA
- One WACC, Three Wrong Turns · BF
- The Profit That Isn't There Yet · FR
- The Variance That Hid a Good Month · SMA
- Outside In: PESTEL and Five Forces · GSL
Any companies and people in our lessons are fictional. EstatePass is not affiliated with CPA Australia; lessons and questions are our own, written from public standards and legislation.