Ethics and Professional Judgment in Accounting.

Accounting professionals will use judgement often to make ethical decisions. Integrity, objectivity and professional judgement are the core values of GAAP. Professional judgement are based on the information gathered and probing question to make a audit judgment. Professional judgment is what makes an accountant a professional and it underlies the fundamental obligation to protect the public interest. The professions codes of ethics call for independent judgments and to not subordinate professional judgment to a supervisor or client.

Public Interest Principle in the AICPA Code recognizes that conflicts may exist between stakeholder interests, and it calls for fulfilling responsibilities to the public as a way of also serving clients and employers interests. These rules are designed to ensure competencies within accounting professionals and fair administration of the rules through consistent standards. Professional judgment is what makes an accountant a professional and it underlies the fundamental obligation to protect the public interest.

The International Federation of Accountants (IFAC) addresses the public interest dimension in its Policy Position Paper #4, entitled A Public Interest Framework for the Accountancy Profession. The framework is designed to enable IFAC and other professional bodies to better evaluate whether the public interest is being served through actions of the profession and its institutions. IFAC considers the public interest to represent the common benefits derived by stakeholders of the accounting profession through sound financial reporting.

For Discussion purposes answer 1, 2 or all 3 questions below:

Do you believe the internal audit activity should be independent? Explain.

Explain the threats to professional skepticism that might influence audit judgment.

Explain the safeguards that can be used to reduce or eliminate threats to audit independence.