Business Law and Ethics
Business Law and Ethics combines Kazakh civil and entrepreneurial law with the IESBA code of ethics. Questions test entity forms, contract formation, authority to bind a company, limitation periods and the ethical threats that arise in client work.
Legal framework
- Entity forms: the limited liability partnership (ТОО) is the default vehicle; the joint-stock company (АО) is used for larger and listed businesses. Registration is electronic through state revenue authorities.
- Contracts: offer, acceptance and consideration of terms; material terms must be agreed. Authority of a director is limited by charter and by law, and third parties may rely on apparent authority.
- Limitation: the general limitation period under the Civil Code is three years.
- Insolvency: rehabilitation and bankruptcy are governed by the Entrepreneurial Code and related insolvency rules.
Ethics
- Five principles: integrity, objectivity, professional competence and due care, confidentiality, professional behaviour.
- Threats: self-interest, self-review, advocacy, familiarity, intimidation.
- Safeguards: remove the interest, add an independent review, disclose to those charged with governance, or decline the engagement.
- Independence applies to audit and review engagements, not to every engagement.
Worked example
The audit partner's spouse acquires shares in an audit client. This creates a self-interest and familiarity threat involving an immediate family member with a direct financial interest. Safeguards cannot reduce the threat to an acceptable level for a direct interest held by a close family member of the engagement partner, so the shareholding must be disposed of or the partner removed from the engagement. Disclosure alone is not a sufficient safeguard here.
Traps
- Treating confidentiality as absolute when law or professional duty requires disclosure.
- Applying audit independence rules to a compilation engagement.
- Accepting a gift that is trivial to the client but significant to the auditor.