Independence

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Independence

  1. 1. CODE OF ETHICS <ul><li>Cases & Issues of Unjustified </li></ul><ul><li>Removal of Auditors: </li></ul><ul><li>Independence of Auditors </li></ul>
  2. 2. Unjustified Removal of Auditors <ul><li>Section 224 – Appointment & Remuneration of Auditor </li></ul><ul><li>Section 224A – Auditor not to appointed except with the approval of the company by special resolution in certain cases. </li></ul><ul><li>Section 225 – Provisions as to resolutions for appointing or removing auditors </li></ul><ul><li>Clause (8)&(9) Part I of Schedule I of CA Act,1949 </li></ul>
  3. 3. Relationship with Other Members in Practice <ul><li>Communication with outgoing Auditor in case of change of auditor </li></ul><ul><li>Compliance with the requirement of section 224, 224A & 225 of the Companies Act, 1956 </li></ul>
  4. 4. Communication with outgoing Auditor in case of change of auditor <ul><li>Non-compliance of the Provisions of Section 224, 224A & 225 of the Companies act, 1956 </li></ul><ul><li>Undercutting of Fees </li></ul><ul><li>Non-payment of undisputed audit fees </li></ul><ul><li>Issuance of a qualified report </li></ul>
  5. 5. Compliance with the requirement of Sec. 224, 224A & 225 of the Companies Act <ul><li>To ensure that the outgoing is properly removed </li></ul><ul><li>That the guidelines prescribed by the Institute have been complied with </li></ul><ul><li>To ensure that the incoming auditor is properly appointed. </li></ul>
  6. 6. INDEPENDENCE <ul><li>Independence of Mind </li></ul><ul><li>Independence in Appearance </li></ul>
  7. 7. Independence Should be Exhibited in <ul><li>Objectivity </li></ul><ul><li>Integrity </li></ul><ul><li>Professional Services </li></ul>
  8. 8. Threats of Independence <ul><li>Self - Interest Threat </li></ul><ul><li>Advocacy Threat </li></ul><ul><li>Familiarity Threat </li></ul><ul><li>Intimidation Threat </li></ul><ul><li>Self Review Threat </li></ul>
  9. 9. Safeguards <ul><li>Safeguards Created by the Profession, Legislation or Regulation </li></ul><ul><li>Safeguards within the Assurance Client </li></ul><ul><li>Safeguards within the Firm/s own Systems & Procedures </li></ul>
  10. 10. Safeguards Created by the Profession, Legislation or Regulation <ul><li>Education, Training & Experience </li></ul><ul><li>Continuing Education Requirements </li></ul><ul><li>Professional Standards & Disciplinary Processes. </li></ul><ul><li>External Review of Firms Quality Control System. </li></ul><ul><li>Legislation Governing Independence </li></ul>
  11. 11. Safeguards within the Assurance Client <ul><li>Competent Employees to make Managerial Decisions. </li></ul><ul><li>Policies and Procedures for fair Financial Reporting. </li></ul><ul><li>Internal Procedures </li></ul><ul><li>Corporate Governance Structure </li></ul>
  12. 12. Safeguards within the Firms own Systems & Procedures <ul><li>Firm Leadership </li></ul><ul><li>Policies & Procedures for Quality Control </li></ul><ul><li>Documented Independence regarding Identification of threats and Application of Safeguards. </li></ul><ul><li>Disciplinary Mechanism </li></ul>
  13. 13. Objective & Structure <ul><li>Identifying Threats to Independence </li></ul><ul><li>Evaluating the Threats </li></ul><ul><li>Applying appropriate Safeguards to eliminate or reduce the threats. </li></ul>
  14. 14. Public Interest Public Consists of <ul><li>Clients </li></ul><ul><li>Credit Granters </li></ul><ul><li>Government </li></ul><ul><li>Employers </li></ul><ul><li>Employees </li></ul><ul><li>Investors </li></ul><ul><li>Business </li></ul><ul><li>Financial Community </li></ul>
  15. 15. Objectives <ul><li>Credibility </li></ul><ul><li>Professionalism </li></ul><ul><li>Quality of Services </li></ul><ul><li>Confidence </li></ul>
  16. 16. Fundamental Principles <ul><li>Integrity </li></ul><ul><li>Objectivity </li></ul><ul><li>Professional Competence and Due Care </li></ul><ul><li>Confidentiality </li></ul><ul><li>Professional Behavior </li></ul><ul><li>Technical Standards. </li></ul>
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