Professional Ethics and Auditor Conduct
The ethical foundation
Auditor ethics rest on a small set of principles: integrity, objectivity, confidentiality, competence and due care, and professional behaviour. Candidates must be able to recognise a threat to these principles and the appropriate response. Common threats include self-interest (financial or personal gain), self-review (auditing your own work), advocacy (promoting the client's position), familiarity (too close to the auditee), and intimidation (pressure from a senior person).
Safeguards
Know that threats are addressed by safeguards: rotating staff, removing the auditor from the engagement, independent review, or declining the work. Confidentiality means not disclosing information obtained during the audit except where required by law or authorised - and it survives the end of the engagement.
Traps to watch
- Treating a perceived conflict as harmless because the auditor feels objective. Perception matters.
- Confusing confidentiality with secrecy - disclosure required by law is permitted.
- Accepting gifts or hospitality that could create a self-interest or familiarity threat.
- Failing to disclose a personal relationship with an auditee.
Rule of thumb
Ask: would a reasonable, informed third party see a threat? If yes, disclose it and apply a safeguard, even if you believe you are objective.
Worked example
An auditor is asked to review a system they designed two years ago. This is a self-review threat. The safeguard is to assign the engagement to another auditor; disclosure alone does not remove the threat.