9.2 Ethical Value and Morality The conducts of audit require someone with strong ethical value and it is for this reason that accountancy bodies issue ethical code to their members. The ethical code is made up values and principles, which guide auditors in their professional conduct (Calota, 2008). The fundamental principles of the ethical code are integrity, objectivity, professional competence and due care, confidentiality and professional behaviour (IFAC, 2010). The first problem with the ethical code issued by profession bodies is implementation. Auditors do not follow the tenet of the code in their professional conduct. For instance, in 2002, PWC violated the code regarding audit independence. Similarly, EY breached the code in 2004 by entering into unethical relationship with its client in US (Sikka, 2009). The second problem with the code is that it focuses only on ethical or unethical action of the auditors not whether the action is right or wrong (Talha and Shalka, 2003). The code is based on ethical theory of deontology, which is rule oriented and concerns about the action, rather than consequence of an action that is why auditor who observed that something is wrong in a company would not disclose it because principle of confidentiality forbids him from disclosing information of his client to third party (Talha and Shalka, 2003). This suggests that the code hinders the principle of utilitarianism (Cooley, 2003), that is doing what is right and acceptable to majority. The Role, Compromise and Problems of the External Auditor in Corporate Governance* Abstract James O. Alabede (Daniel Vieites)
Posted on: Mon, 15 Sep 2014 09:52:04 +0000
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