Legislative requirements: Corporations Act 2001 (continued): Section 300(1)(ca): Former auditors. Directors’ report is to include names of each officer of client who was a former partner or director of current auditor. Section 324CI: Member of audit firm Cannot become director, company secretary or member of senior management of a client until two years after ceasing to be with audit firm. Section 324DA: Rotation of audit partners. Lead or review partner for five successive years cannot play a significant role in the audit of that entity for at least another two successive years.

Auditor independence:- Independence is a key characteristic of an audit or assurance service provider. In order for auditors to add credibility to financial reports or other subject matter, they need to remain independent. Independence is one of the fundamental ethical virtues or principles required by APES 110.

American Accounting Association Model:- Determine the facts Define the ethical issues Identify the major principles, rules and values Specify the alternatives Compare values and alternatives Assess the consequences Make your decision

Ethical decision models: There are a number of ethical decision-making models that have been developed to assist in sound ethical decision making. The key factors to be considered in ethical conflict resolution are: relevant facts ethical issues involved fundamental principles related to the matter in question

Ethical codes and disciplinary rules: APES 110 ‘Code of Ethics for Professional Accountants’, issued by the Accounting Professional and Ethical Standards Board (APESB), indicates that members are expected to comply with the spirit as well as the letter of the rules. APES 110 sets out the main ethical pronouncements that relate to the undertaking of an audit. ASA 200.14/ISA 200.14 and ASA 102.5 require that auditors comply with relevant ethical requirements. Ethics are principally attitudes of mind rather than compliance with written rules of conduct.

It requires both knowledge of moral principles and also skills in applying them to problems and decisions. Ethical codes and disciplinary rules APES 110 ‘Code of Ethics for Professional Accountants’, issued by the Accounting Professional and Ethical Standards Board (APESB), indicates that members are expected to comply with the spirit as well as the letter of the rules. APES 110 sets out the main ethical pronouncements that relate to the undertaking of an audit. ASA 200.14/ISA 200.14 and ASA 102.5 require that auditors comply with relevant ethical requirements. Ethics are principally attitudes of mind rather than compliance with written rules of conduct.

Topic 2: Governance and Ethics explain the concept of corporate governance and the relationships between the auditor, the client and the public; discuss the nature and responsibilities of audit committees; gain an appreciation of how the quality of professional services is assured demonstrate an understanding of auditing standards gain an appreciation of the need for a professional code of conduct; apply the ethical rulings of the accounting bodies using sound ethical decision-making techniques; explain the concept of independence Professional ethics and ethical theory Ethics are concerned with the requirements for the general well-being, prosperity, health and happiness of people.