Ethics, Professional Conduct and Computerised Accounting Systems
This domain tests ethical threats and safeguards and the controls needed in computerised accounting. Exam questions present a scenario and ask you to identify the threat, the principle affected and an appropriate safeguard, or to identify a weakness in an accounting system.
Core rules
- Fundamental ethical principles include integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
- Threats include self-interest, self-review, advocacy, familiarity and intimidation.
- Safeguards include independent review, rotation, disclosure, training and consultation.
- Confidentiality is not absolute; disclosure may be required by law or permitted with consent.
- Computerised systems need access controls, segregation of duties, audit trails, backup and master-file amendment controls.
- Automated processing does not remove the need for reconciliations and professional scepticism.
Worked example
An accountant prepares the financial statements and receives a bonus linked to reported profit. This creates a self-interest threat to objectivity. A safeguard is independent review of the statements and the bonus decision by someone not involved in preparation. If the same person can also change supplier master files and approve payments, there is a segregation-of-duties weakness; the system should restrict master-file changes and require independent approval of payments.
Traps
- Assuming all ethical threats can be eliminated rather than reduced to an acceptable level.
- Treating confidentiality as absolute.
- Relying on computerised controls without testing them.
- Ignoring audit trails and access rights.