nbaa ettiquates for accountants

International Federation of Accountants

Etiquettes for Professional Accountants

NBAA Bunju

Kassim Hussein, PhDContact 255 754360174

[email protected]

International Federation of AccountantsOrganization:Part lConcepts and meaningRelationships – How you want to be perceivedExample of etiquettes on IT based interactions and suggestionsIceberg and incorporating UTU/UMUNTU in corporate life

Part llNBAA/IFAC Code of EthicsIFC structurePart A – Framework applies to all professional accountantsPart B – Professional accountants in public practicePart C – Professional accountants in businessThreats/Risks

Part lllIllustrations – in Kiswahili

International Federation of AccountantsThomas Farley, a manners and etiquette expert offering training to businesses across the U.S, spoke on the value of manners noted that the most important aspect to making an impression is the first seven seconds of meeting anyone, stressing the concept of "Remember-ability."

"If you're not planning on how you're going to be perceived, how can you be perceived the way you want," Farley asked the audience.

International Federation of AccountantsThen, according to Farley, you have "ten seconds to intrigue." "Don't think of yourself in the terms of the company you work for, position you have, or the school you went to,” "but what would interest the person [you're] talking to. Think of your introductory remarks not as, 'I work here,' but 'I help people who...' Think about how do make the person [you're talking to] shine." He pointed to 7 minutes being the duration of a good networking conversation.

International Federation of Accountants Etiquette, decorum, propriety imply observance of the formal requirements governing behavior in polite society. Decorum suggests dignity and a sense of what is becoming or appropriate for a person of good breeding: a fine sense of decorum. Propriety (usually plural) implies established conventions of morals and good taste: She never fails to observe the proprieties.

International Federation of Accountants

International Federation of AccountantsHere are a few suggestions on etiquette when it comes to social media ventures.

1. Keep your personal and business accounts separate.

2. Provide information from other sources. While the point of a social media site for a business is to promote your services, customers appreciate getting tips and suggestions from other sources too.

3. Use proper grammar and spelling..4. Pay attention to who you are following.- See more at: http://blog.aicpa.org/2012/08/4-social-media-etiquette-

tips-for-cpas.html#sthash.u8LFrM9Q.dpuf

International Federation of Accountants1. Be Concise. 2. Don’t Be

Unprofessional.3. Proofread. 4. Don’t Get

Disorganized.5. Add A

Signature.

Ethics of Professional Accountants

• Ethics deals with things to be sought and things to be avoided

• Morals: rules or duties that govern our behavior, e.g. “do not tell a lie”

Ethics and Morals

values• Values: these are beliefs that a given

behavior or outcome is desirable or good.

• Values serve as standards of conduct that guide our behavior

• Example: how we value the environment, self-respect keeping our family safe, good health, (e) politics.

Free Template from www.brainybetty.com

1313 13

SEA LEVEL

10 %

90 %

VISIBLE

INVISIBLE

ICE BERGE


1414 14

SEA LEVEL

10 %

90 %

VISIBLE

INVISIBLEIntegrity Honesty Respect Trustworthy

Wisdom Patience Perseverance…..

UTU…. umutu


1515 15

SEA LEVEL

10 %

90 %

VISIBLE

INVISIBLEIntegrity Honesty Respect Trustworthy

Wisdom Patience Perseverance Courtesy Dependable Fair Transparent

Kind Ethical

UTU…. umutu

IFC outline

Part A – Framework applies to all professional accountants

Part B – Professional accountants in public practice

Part C – Professional accountants in business

• Integrity

– To be straight forward and honest in all professional and business relationships

• Objectivity

– To not allow bias, conflict of interest or undue influence of others to override professional or business judgments

Fundamental Principles

Professional Competence and Due Care To maintain professional knowledge and

skill at the level required to ensure competent professional services based on current developments in practice, legislation and techniques

To act diligently in accordance with applicable technical and professional standards


Confidentiality– To refrain from disclosing confidential information

acquired as a result of professional and business relationships without proper and specific authority to disclose unless there is a legal or professional right or duty to disclose

– To refrain from using confidential information acquired as a result of professional and business relationships for personal advantage or the advantage of third parties


Professional behavior–Obligation to comply with relevant

laws and regulations and avoid any action that discredits the profession/ role as a director

Fundamental Principles in CG also focus on

Objectives of Professional Accountants

work to the highest standards of professionalism

attain the highest levels of performance, and

meet the public’s interest

• Self-interest• Self-review• Advocacy• Familiarity• Intimidation

Threats/ Risks

Two categories:• Created by the profession, legislation or

regulation• In the work environment

Safeguards/Risks

IFAC Code of Ethics – fundamental Principles for all

Accountants:

Integrity (Sec 110) Objectivity (Sec 120) Professional Competence and Due Care

(Sec 130) Confidentiality (Sec 140) Professional Behavior (Sec 150)

Continuation…

Integrity The principle of integrity imposes an obligation on all

professional accountants to be straightforward and honest in performing professional services. It also implies fair dealing and truthfulness.

In CG the maxim: ‘Fit for purpose’ entails competency

Objectivity: The principle of objectivity imposes on all professional

accountant not to compromise their professional or business judgment because of bias, conflict of interest or undue influence of others

Professional Competence and Due Care: A professional accountant has a continuing

duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques.

Confidentiality: A professional accountant should respect the

confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without proper and specific authority.

Professional Behavior: A professional accountant should comply with

relevant laws and regulations and should avoid any action that discredits the profession.

fiduciary responsibilities…. Fiduciary duty means that, as shareholders’ guardians, directors

must be trustworthy, acting in the best interest of shareholders, and investors in turn have confidence in the directors’ actions.

The corporate governance literature presents the following fiduciary duties of boards of directors:

– Duty of due care– Duty of loyalty– Duty of Good Faith – Duty to Promote Success – Duty to Exercise Diligence, Independent Judgment, and Skill – Duty to Avoid Conflict of Interests – Fiduciary Duties and Business Judgment Rules.

Conceptual Framework Approach

• A conceptual framework requires a professional accountant to identify, evaluate and address threats to compliance with the fundamental principles, rather than merely comply with a set of specific rules which may be arbitrary.

• If threats to ethics are not clearly insignificant, a professional accountant should apply safeguards to eliminate the threats or reduce them to an acceptable level.

When safeguards are never adequate

Prohibitions

The rest…. Is stuff from IFAC focused on Auditors … recapped

Threat to Independence

Advocacy Threat Familiarity

Threat

Self Interest

Intimidation Threat

Self Review Threat

Identification of threats to Auditors’ independence

Threats and SafeguardsCompliance with the fundamental principles may potentially be threatened by a broad range of circumstances. Many threats fall into the following categories:

• Self-interest threats• Self-review threats• Advocacy threats• Familiarity threats• Intimidation threats

Self-Interest ThreatA Self-interest threat occurs as a result of the financial or other interests of a professional accountant or of an immediate or close family member;

In CG this situation is referred as Conflict of Interest. More over, in CG there is ‘conduct risk assessment’

Self Interest Threats Circumstances

• A financial interest in a client or jointly holding a financial interest with a client.

• Undue dependence on total fees from a client.• Having a close business relationship with a client.• Concern about the possibility of losing a client.• Potential employment with a client.• Contingent fees relating to an engagement.• A loan to or from a client or any of its directors or

officers.

Self-Review Threats Circumstances• The discovery of a significant error during a re-evaluation

of the work of the auditor.• Reporting on the operation of financial systems after being

involved in their design or implementation.• Having prepared the original data used to generate records

that are the subject matter of the engagement.• A member of the team being, or having recently been, a

director or officer of that client.• A member of the team being, or having recently been,

employed by the client in a position to exert direct and significant influence over the subject matter of the engagement.

• Performing a service for a client that directly affects the subject matter of the engagement.

Advocacy ThreatAn Advocacy Threat occurs when a professional accountant promotes a position or opinion to the point that subsequent objectivity may be compromised.

Examples of circumstances that create advocacy threats :

Selling, underwriting or otherwise dealing in financial securities or shares of a client;

Acting as an advocate on behalf of a client in litigation or disputes with third parties.

• Professional Appointment• Conflicts of Interest• Second Opinions• Fees and Other Types of Remuneration• Marketing Professional Services• Gifts and Hospitality• Custody of Client Assets• Objectivity – All Services• Independence – Audit and Review Engagements• Independence – Other Assurance Engagements

Part B – Professional Accountants in Public Practice

• Firm includes network firm, except where otherwise stated

• Independence of mind and independence in appearance

• Public interest entities: additional provisions in Section 290 that reflect the extent of public interest in certain entities

Independence for Audit and Review Engagements

• Documentation: conclusions regarding compliance with independence requirements,

and substance of any relevant discussions that support those conclusions

Independence for Audit and Review Engagements – cont’d

• Financial interests

• Loans and guarantees

• Business relationships

• Family and personal relationships

• Employment with an audit client

• Temporary staff assignments


• Recent service with an audit client

• Serving as a director or officer of an audit client

• Long association of senior personnel (including partner rotation) with an audit client


• Provision of non-assurance services to audit clients

– Management responsibilities

– Preparing accounting records and financial statements

– Valuation services

– Taxation services

– Internal audit services


• Provision of non-assurance services to audit clients

– IT systems services

– Litigation support services

– Legal services

– Recruiting services

– Corporate finance services


• Fees

• Compensation and evaluation policies

• Actual or threatened litigation

• Reports that include a restriction on use or distribution


• Assurance engagements that are not audit or review engagements

• Include related entities when reason to believe relevant to independence

• Include network firms when reason to believe relevant to independence

Independence for Other Assurance Engagements

• Assertion-based assurance engagements– Independence required from assurance client (party

responsible for the subject matter information, and which may be responsible for the subject matter)

– When client not responsible for subject matter evaluate the threats firm has reason to believe created by interests and relationships with party responsible for subject matter

• Direct reporting engagements– Independence required from assurance client (party

responsible for the subject matter)


• Multiple responsible parties

– Firm may take into account whether interest or relationship with a particular responsible party creates a threat. Consider:

• Materiality of subject matter information (or subject matter) for which the particular responsible party is responsible

• Degree of public interest associated with engagement


• Potential conflicts• Preparation and reporting of information• Acting with sufficient expertise• Financial interests• Inducements

Part C – Professional Accountants in Business

Intimidation Threat

Intimidation Threat occur when a professional accountant may be deterred from acting objectively by threats, either actual or perceived.

Examples of circumstances:• Being threatened with dismissal or replacement

in relation to a client engagement.• Being threatened with litigation.• Being pressured to reduce inappropriately the extent of

work performed in order to reduce fees.

Safeguards

Safeguards that may eliminate or reduce such threats to an acceptable level fall into three broad categories:

– Safeguards created by the profession, legislation or regulation;

– Safeguards within the client; and– Safeguards within the firm’s own systems and

procedures.

Safeguards created by the profession, legislation or regulation

Educational, training and experience requirements for entry into the profession.Continuing professional development requirements.Corporate governance regulations.Professional standards.Professional or regulatory monitoring and disciplinary proceduresExternal review by a third party of the reports, returns, communications or information produced by a professional accountant.

Safeguards within the Client

When the client’s management appoints the firm, persons other than management ratify or approve the appointment;

The client has competent employees to make managerial decisions;

Policies and procedures that emphasize the client’s commitment to fair financial reporting;

A corporate governance structure, such as an audit committee, that provides appropriate oversight and communications regarding a firm’s services.

Safeguards in the work environment leadership that stresses the importance of independence

and the expectation that members of the teams will act in the public interest.

Policies and procedures to implement and monitor quality control of the engagements;

Documented independence policies regarding the identification of threats to independence, the evaluation of the significance of these threats and the identification and application of safeguards to eliminate or reduce the threats, other than those that are clearly insignificant, to an acceptable level;

Resolution of Ethical ConflictsIf the matter remains unresolved, the professional

accountant should consult with other appropriate persons within the firm

Where a matter involves a conflict with, or within, an organization, consult with those charged with governance of the organization, such as the board of directors or the audit committee.

If a significant conflict cannot be resolved, obtain professional advice from the relevant professional body or legal advisors.

If, after exhausting all relevant possibilities, the ethical conflict remains unresolved, a professional accountant should, where possible, refuse to remain associated with the matter creating the conflict.

Professional AppointmentClient Acceptance - consider whether acceptance would create any threats to compliance with the fundamental principlesEngagement Acceptance - agree to provide only those services that the accountant is competent to perform.

Changes in a Professional Appointment

Before accepting an appointment involving services that were carried out by another, the proposed auditor should: – Request permission from the client to contact

former auditor directly;– Contact existing auditor before beginning

audit.

Information from Existing Auditor

• Once the client permission is obtained, the existing auditor should provide information honestly and unambiguously.

• If the proposed auditor is unable to communicate with the existing auditor, the proposed auditor should try to obtain information about any possible threats by other means such as through inquiries of third parties or background investigations on senior management.

• The existing auditor is no longer required to provide information in writing or regarding reasons not to take an audit.

Conflicts of Interest

A professional accountant in practice should take reasonable steps to identify circumstances that could pose a conflict of interest. Such circumstances may give rise to threats to compliance with the fundamental principles

Second Opinions

• Providing a second opinion on the application of accounting, auditing, reporting or other standards or principles by or on behalf of a company that is not an existing client may cause threats to compliance with the fundamental principles.

• Safeguards such as seeking client permission to contact the existing auditor, describing the limitations surrounding any opinion and providing the existing auditor with a copy of the opinion may be required.

Fees and Other Types of Remuneration

An auditor may quote whatever fee deemed to be appropriate. However, a self-interest threat to professional competence and due care is created if the fee quoted is so low that it may be difficult to perform the engagement.

Commissions, Referral Fees, and Contingent Fees

• A professional accountant in public practice should not pay or receive a referral fee or commission, unless he/she has established safeguards to eliminate the threats or reduce them to an acceptable level.

• Contingent fees are widely used for certain types of non-assurance engagements. They may, however, give rise to self-interest threats to compliance with the fundamental principles.

Advertising and Marketing

When a professional accountant in public practice solicits new work through advertising or other forms of marketing, there may be potential threats to compliance with the fundamental principles.

What Advertising Cannot Do

A professional accountant should not bring the profession into disrepute when marketing professional services. He/she should be honest and truthful and should not:

• Make exaggerated claims for services offered, qualifications possessed or experience gained; or

• Make disparaging references to unsubstantiated comparisons to the work of another.

Gifts and Hospitality

• Self-interest threats to objectivity may be created if a gift from a client is accepted; intimidation threats to objectivity may result from the possibility of such offers being made public.

• Gifts or hospitality which are acceptable are those which a reasonable and informed third party, having knowledge of all relevant information, would consider clearly insignificant.

Custody of Client Assets

Safeguard against a self-interest threat to objectivity , a professional accountant in public practice entrusted with money (or other assets) belonging to others should: Keep such assets separately from personal or

firm assets; and Use such assets only for the purpose for which

they are intended. At all times, be ready to account for those

assets, and any income, dividends or gains generated.

Comply with all relevant laws and regulations relevant to the holding of and accounting for such assets.

Application of Framework to Specific Situations

The Code of Ethics, discusses a principles-based framework for identifying, evaluating and responding to threats. The framework establishes principles to identify threats to ethics principles, evaluate the significance of those threats, and, if the threats are other than clearly insignificant, identify and apply safeguards to eliminate the threats or reduce them to an acceptable level.

An accountant may perform services in a country other than his home country. If differences exist between ethical requirements of the two countries, the strictest provisions should be applied.

Cross-Border Activities

The IFAC Code prohibits the following non-audit services for audit clients:

• Bookkeeping Services• Valuation services • Management decision making functions • Broker-dealer or investment advisor

services • Litigation support

Financial involvement with a client

direct financial interest in a client; indirect material financial interest

loans to or from the client or any director or major stockholder in the client company;

financial interest in a joint venture with a client or employee(s) of a client.

financial interest in non-client with investor or investee relationship with the client.

Professional Competence and Responsibilities Regarding the Use of Non-Accountants

If a professional accountant does not have the competence to perform a specific part of the professional service, technical advice may be sought from experts(such as other professional accountants, lawyers,

actuaries, engineers, geologists, and evaluators). However, since the auditors have ultimate

responsibility for the service, it is his responsibility to see that the requirements of ethical behavior are followed.

Activities Incompatible with the Practice of Public Accountancy A CPA in public practice should not concurrently

engage in any business, occupation or activity that impairs or might impair integrity, objectivity or independence, or the good reputation of the profession.

The simultaneous engagement in another activity unrelated to assurance or accounting services, which reduces the accountant’s ability to conduct his accounting practice according to ethical principles, is inconsistent with public practice.

Conflict of Loyalties

• Employed professional accountants owe a duty of loyalty to their employer as well as to their profession and there may be times when the two are in conflict.

• An employee cannot legitimately be required to break the law, breach the ethics, rules, and standards of the accounting profession, lie to their employer’s auditors, or be associated with a statement that materially misrepresents the facts.

• If employed accountants cannot resolve any material issue involving a conflict between their employers and their professional requirements they may have no other recourse but to resign.

Support for Professional Colleagues and Professional Competence

• Support for Professional Colleagues A professional accountant, particularly one having authority over others, should allow them to develop their own judgment in accounting matters.• Professional Competence An accountant employed in industry, commerce, the public sector or education may be asked to undertake significant tasks for which she has not had sufficient specific training or experience. Where appropriate expert advice and assistance should be sought.

Presentation of Information

A professional accountant is expected to present financial information fully, honestly and professionally and so that it will be understood in its context.

Under CG, the Directors are equally responsible and have to make attestation on the financial information

Disciplinary action and common sanctions

• Disciplinary action ordinarily arises from such issues as: – failure to observe the required standard of professional

care, skills or competence;– non-compliance with rules of ethics and discreditable;

or dishonorable conduct. • Sanctions commonly imposed by disciplinary

bodies include: – reprimand, fine, payment of costs, withdrawal of

practicing rights, suspension, and expulsion from membership.

– LEGAL OR imposed at the AGM

Discussions, Q & A

Thank you

Kassim Hussein, PhD

[email protected]

+255 754 360 174

mailto:[email protected]

Hali ilivyo…

Utafiti wa Hali ya Uzingatiaji wa Maadili (Integrity Survey, OR-MUU/Mzumbe University 2014):

Maeneo yaliyokithiri kwa utovu wa Maadili;- Matumizi ya Madaraka kwa manufaa binafsi (24%) Mgongano wa Maslahi (16%) Matumizi mabaya ya Rasilimali za Umma (14.5%)

Kiwango cha Uzingatiaji wa Maadili katika Utumishi wa Umma kimefikia 66.1% (+9.2%)

May 3, 2023 79

May 3, 2023 80

Taarifa ya Miaka Kumi ya Tume ya Utumishi wa Umma (2004-2014) imeonesha kuwa: Waajiri kutozingatia Kanuni na taratibu za Utumishi wa Umma.

- Kati ya Mwaka 2004-2013 kulikuwa na Rufaa za Mashauri ya Nidhamu 842 ziliwasilishwa Tume ambapo Rufaa 383 sawa na asilimia 45% ndizo pekee zilizokubaliwa ama moja kwa moja au kwa masharti ya kuanza upya.

Hali ilivyo sasa

Hali ilivyo…

May 3, 2023 81

- Vitendo visivyo vya kiadilifu miongoni mwa Watumishi wa Umma bado ni kubwa;

- Kati ya Mwaka 2008-2013 kulikuwa na Mashauri ya Nidhamu 2,755 ambapo Watumishi 1,142 walifukuzwa kazi kwa makosa ya Utoro(53.6%), Ubadhirifu wa Mali ya Umma (19.7%) na makosa mengineyo 13.3%

- Kati ya Kesi 2,322 zilizokuwepo Mahakamani 2004-2013, 59.6% zilihusu ubadhirifu wa Mali ya Umma na 16.4% zilihusu Rushwa.

Hali ilivyo…

May 3, 2023 82

- Baadhi ya Waajiri hawazingatii wala kusimamia Haki na Stahili

za Watumishi wa Umma na kusababisha Malalamiko miongoni mwa Watumishi

- Kati ya Mwaka 2008-2013 jumla ya malalamiko 1,231 yaliyopokelewa na Tume ya Utumishi wa Umma yalihusu Madai ya Mafao/Pensheni, Ajira, kutotendewa haki, kutopandishwa./kutobadilishwa cheo, malimbikizo ya Mishahara, n.k

Hali ilivyo…Vyanzo vingine vinasemaje kuhusu hali ya

rushwa:-• Fordia 2010 - TANESCO, Polisi na

Uhamiaji.• EABI 201I : Tanzania ya 3 kati ya 5

zilizotathiminiwa Afrika Mashariki ikitanguliwa na Uganda na Burundi

• EABI 2012 : Tanzania ya 4 kati ya 5 zilizotathiminiwa Afrika Mashariki ikitanguliwa na Burundi

Hali ilivyo…

• REPOA: 65% wanasema rushwa bado ni tatizo kubwa

• TI 2014: Tanzania nchi ya 119 kati ya nchi 175 duniani kutoka nchi ya 102 mwaka 2012.