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Ethics in the Auditing Process and Profession

Some ethical theories, such as deontological ethics and virtue ethics, can be used to work with issues that can appear during the audit process. According to deontological ethics, “people have a duty to respect other people’s rights and treat them accordingly” (Ethical theories, n.d.). Thus, when faced with an ethical issue, one should identify their own duties and others’ rights, try to fulfill the former, and respect the latter. Regarding virtue ethics, they reflect on the selected set of ethics that characterize a good person or a good professional (Ethical theories, n.d.). According to virtue ethics, a person should always act in light of those selected virtues. These theories can be used to build an ethical framework in auditing – virtue ethics are supplemented perfectly by various audit ethic codes, which can also be helpful when determining one’s duties within deontological ethics.

Regarding different views on rules of conduct, there are the American Institute of CPAs [AICPA] Rules of Conduct and the International Ethics Standards Board for Accountants [IESBA]. According to the former, the fundamental principles include responsibilities, the public interest, integrity, objectivity and independence, due care, scope, and nature of service (AICPA, 2021). At the same time, IESBA (2018) highlights such principles as integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. It can be observed that both lists include similar entries: objectivity, due care, and integrity. Moreover, it can also be argued that contrasting points, such as confidentiality, professional behavior, and public interest, are integrated into both rule sets, just in different words and with differently placed emphasis.

In an auditing context, independence means objectivity; it implies being “impartial, intellectually honest, and free of conflicts of interest” (Dopuch et al., 2003, p. 84). There can be in fact independence and, in appearance independence. Independence in fact (IIF) requires an auditor to have an independent mindset before and during the audit, creating an unbiased product. Independence in appearance (IIA) means that an auditor seems to be independent of an external party. While auditors can be independent in both cases, the difference lies in the auditor’s integrity and objectivity. In the IIF case, the auditor is truly independent, in the IIA case, the auditor may be biased, but a third party did just not figure this out yet.

References

American Institute of Certified Public Accountants. (2021). Code of professional conduct

Ethical theories. (n.d.).

International Ethics Standards Board for Accountants. (2018). Handbook of the International Code of Ethics for Professional Accountants

Dopuch, N., King, R.R., and Schwartz, R. (2003). Independence in Appearance and in Fact: An Experimental Investigation. Contemporary Accounting Research, 20, 79-114.

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"Ethics in the Auditing Process and Profession." StudyKraken, 11 Sept. 2022, studykraken.com/ethics-in-the-auditing-process-and-profession/.

1. StudyKraken. "Ethics in the Auditing Process and Profession." September 11, 2022. https://studykraken.com/ethics-in-the-auditing-process-and-profession/.


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StudyKraken. "Ethics in the Auditing Process and Profession." September 11, 2022. https://studykraken.com/ethics-in-the-auditing-process-and-profession/.

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StudyKraken. 2022. "Ethics in the Auditing Process and Profession." September 11, 2022. https://studykraken.com/ethics-in-the-auditing-process-and-profession/.

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StudyKraken. (2022) 'Ethics in the Auditing Process and Profession'. 11 September.

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