 According to the Code of Professional Conduct an auditor must have integrity,

meaning that an auditor must be honest and truthful in their professional relations.
 All in all, her actions raise serious doubts as to her ability to act honestly and
ethically. This indicates that she would not be a fit person to be allowed into the
profession as a CA (SA).
 Benny Bell is a chartered accountant and is therefore subject to the SAICA Code of
Professional Conduct.
 The Code requires chartered accountants to act with professional competence and
due care by acting diligently and in accordance with applicable technical and
professional standards, which includes timeliness of actions which Benny did not do.
 The Code requires a chartered accountant to conduct himself in a manner which will
not discredit the profession/bring the profession into disrepute thus Benny should be
acting with professional behaviour which he did not based on the actions above.
 According to the CPC, a chartered accountant is entitled to quote whatever fee is
deemed appropriate.
 However, in order to secure a continued engagement with CarTrade (Pty) Ltd,
Raymond proposes to undercharge the client, leading to a self-interest threat to the
fundamental principle of professional competence and due care.
 When an audit client is undercharged, it might not be possible to perform the
engagement in accordance with the applicable technical and professional standards
as the audit firm may not be able to apply the necessary time, skills and resources to
the engagement.
 The auditor may be biased towards the client by not applying sufficient resources to
the audit as a result of knowing that he/she (the auditor) may not be sufficiently
compensated for work performed.
 The CPC states that chartered accountants should not use confidential information
acquired as a result of a professional relationship without specific authority or unless
there is a legal or professional obligation to do so.
 Raymond thus inappropriately intends to use confidential client information for the
firm’s own benefit despite a self-interest threat to confidentiality existing, as no client
permission was obtained, and no legal obligation exists to disclose the information.
 The threat appears to be significant as the information constitutes confidential trade
records.
 Keeping the supplier records as a “backup plan” amounts to a threat to the
fundamental principles of integrity as it constitutes dishonesty
 And a threat to professional behaviour, because such an action may bring the
profession into disrepute should the action come to light.
 Rio Grande Inc. plans to phone suppliers individually in the hope of securing
additional clients using client lists obtained from an existing client (without
permission).
 The Code requires chartered accountants to be honest and truthful in marketing and
further requires advertising that will not bring the profession into disrepute which is
not happening in this situation.
 Actions
 Lodge a formal complaint against Precious with SAICA.
 May hand over their claim to a lawyer.

 The managing director asked Paul to "re-interpret" this division's past results.
 The request to “re-interpret” the past results will constitute breach to integrity.
 This would indicate that In terms of the CPC a professional accountant should
prepare or present financial information fairly, honestly, and in accordance with the
relevant professional standards (e.g. IFRS).
 By removing the provisions which are required Paul is associated with information
that materially false.
 Paul misstated the AFS because he received an incentive to misstate the accounting
records.
 As a result, there is a self-interest threat to Paul’s objectivity because his decision
was influenced by the incentive which was received.
 Paul’s behaviour is also a breach of professional behaviour as his actions are not in
accordance with laws and standards and may bring the profession into disrepute.
 Paul became aware of a material omission relating to the tax returns of prior years as
his client has indicated that there is undeclared income.
 In terms of the Code of Professional conduct a Professional Accountant shall not
knowingly be associated with information where he believes that the information
contains materially false or misleading statement(s);
 contains statements furnished recklessly; or
 omits information required to be included where such omission would be misleading.
 However, when Paul became aware of a material omission relating to the tax returns
of prior years, he should “take steps to be disassociated from that information” – it is
evident that no such steps were contemplated by Paul.
 By attempting to assist the client in concealing his dishonesty, Paul is contributing to
tax evasion.
 Contributing to tax evasion is acting contrary to the fundamental principles of integrity
and professional behaviour.
 This is because Paul is not acting honestly, he is not performing his work diligently
and in accordance with applicable technical and professional standards; he is not
complying with relevant laws and is behaviour will therefore bring the profession into
disrepute.
 Paul is also implicitly advising his client to destroy records which is in contravention
of the fundamental principles of integrity, and professional behaviour.
 Paul received R 10 000 as an agent of sale for Fred Flinstones shares (a client of
his). He used this money to assist another client of his - Dire Straits (Pty) Ltd.
 The R10 000 received by Paul would constitute “client assets” and accordingly the
provisions of the Code would be applicable.
 The Code requires Paul to deposit such monies without delay into an appropriately
designated bank account separate from personal or firm monies – Paul clearly failed
do this.
 Client monies may only be used for the purpose for which they were intended
 It would appear that Paul used the monies without his client’s consent.
 Paul is planning to donate the interest earned to charity. All interest earned on
client’s monies should be credited to the client’s account.
 The managing director of a client (Dire Straits) is the brother-in law of Paul (the audit
partner).
 A close relationship with a director in a position to exert significant influence over the
preparation of the financial statements (e.g., the brother-in-law who is the client’s
managing director) could create a familiarity, self-interest or intimidation threat to
objectivity.
  The resulting threat is clearly unacceptable, and Paul’s objectivity is compromised as
he, at his wife’s insistence, was persuaded to act in a manner contrary to the Code,
to help his brother-in-law.
 The only appropriate safeguard in terms of the Code would be to withdraw from the
audit engagement and not be the audit partner.



Auditing debate
 According to Kant’s categorical imperative, all persons must be judged against an objective
moral law.
 The categorical imperative states that an action can be considered ethical only if one is
willing to allow other people to perform the same action.
 In applying the categorical imperative one should be guided by the principles of
universalizability and reversibility.
 The principle of universalizability demands that we should be willing to make the principle of
our proposed action into a universal law that will be followed by all other people.
 The principle of reversibility demands that we should be willing to live in a world where
everyone else behaves in accordance with this universal law.
 In applying this theory to Customer’s actions, one needs to consider whether customers
would be willing to allow other people to perform the same action.
 Thus, if customers were to consider their actions to be ethical, then they must be willing to
allow the company to hold them accountable for statements where the amount is
incorrectly higher.
 In considering the reversibility of the customers decision one needs to consider whether the
customers will be willing to live in a world where everyone holds the company accountable
to an unethical demand of wanting to pay the lower amount stated incorrectly on the
statement.
 In considering living in this world, the customers would (in all likelihood) determine that it
would be untenable living in this type of world, and it would result in an atmosphere and
environment of rife corruption.
 Therefore, according to the categorical imperative of Deontological ethics the customers
have not performed the correct action.