Governance, Ethics and Professional Skills
Governance architecture
The SECP Code of Corporate Governance requires an effective board with independent directors (including at least one woman on listed boards), separation of chair and CEO, an audit committee chaired by an independent director, a risk and/or HR committee, an internal audit function, a whistleblowing policy, board approval of related-party transactions with interested directors abstaining, and CEO/CFO certification of financial statements. Companies Act 2017 duties - good faith, due skill and care, avoidance of conflicts, disclosure of interest - underpin all of it.
Ethics
The ICAP Code of Ethics, based on IESBA, sets five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. Identify threats (self-interest, self-review, advocacy, familiarity, intimidation), evaluate them, apply safeguards - or decline. Independence for public interest entity audits is stricter: fee dependency, long association and non-assurance services need hard analysis. NOCLAR requires escalation within the entity and consideration of external reporting. Insider dealing, facilitation payments and earnings management are classic triggers.
Professional skills and a rule of thumb
Marks come from application, prioritisation and communication, not recitation. Answer to the named audience, quantify, and conclude. Rule of thumb for an ethics question: name the principle, name the threat, state the safeguard and put the recommended action first - 'decline the engagement' or 'escalate to the audit committee' - then justify. Example: a firm earning 18% of fee income from one listed audit client for three years faces significant self-interest and familiarity threats; fee-dependency safeguards are weak, so resignation or an independent quality review with a fee-cap commitment is the defensible response.