Week 5

School: University of California, Irvine - Course: ACCOUNTING MISC - Subject: Accounting

A number of professionals maintain that the internal auditor must abide by a professional ethicsin order to be effective.Please search 1)Whether there is a difference between the term "ethics" versus the term professional ethics"2) What is/are the underline concept/s and application/s of the term "auditors' professional ethics". Pay a special attention to the "do's and do not's". 3)How the concepts and the rules stated in your finding are impacted by the difference in culture, country (society), religion, social setup of the auditee's environment and industry. 1.In order to become an internal auditor, there are plenty of steps and processes to navigate. One of the most crucial things an internal auditor needs to follow is ethics. Within ethics there is a difference between "ethics" and "professional ethics". "Ethics" or "personal ethics" is something that everyone experiences day to day. For example, ethics could be in different forms such as not stealing, being faithful to your family and friends, or being truthful to people in general. Similar to "ethics", "professional ethics" entails a different aspect since it involves the company that you are currently working for and in this case, the company that is currently being audited by an auditor. "Professional ethics" should draw from "personal ethics", but the main difference between the two is that now a company and the company's employees are affected by the auditor's decision. In my opinion, "professional ethics" should be held in higher responsibility because you are now a face of a company or corporation. When one is tasked with making an ethical personal decision, the only people affected are yourself and the other party. When making a professional ethical decision on financial statements, contracts, or day-to-day processes, this would have an overall effect to the entire company from top to bottom. Many lives would be affected instead of only two parties in a personal ethical dilemma. 2. Integrity, Objectivity, Confidentiality, and Competency are all concepts of professional auditing ethics. As an internal auditor one must have integrity and their work must reflect with honesty and responsibly abiding by the rules and regulation of the law as well. Under integrity, the auditor must not willingly engage in any illegal activity or engage in any act that would be detrimental to the company. Auditors must also be objective in their work, which means they must disclose anything and everything that may be a conflict of interest to the company or the auditor. Auditors work must also be object in the sense that they will not do or engage in any activity that would cloud his or her judgment. Lastly, when presenting their reports or findings, they must include all the details of their findings. Auditors must be confidential in the information that they come across. Auditors must understand that a lot of the information that they are handing are confidential or extremely sensitive information which should not be openly shared. Auditors must not use this information for their personal advantage as well. Auditors must also show competency with the proper knowledge and skill. Auditors must follow "the International Standards for the Professional Practice of Internal Auditing". Lastly, auditors must show that they are always willing to learn and strive for more self-improvement. 3. Auditor's must show integrity, objectivity, confidentiality, and competency when doing their jobs. This is just the standard practice behind being a good auditor. Although it is required for auditors to act with Integrity, Objectivity, Confidentiality, and Competency; however, the definition of each could vary depending on the country, culture, social set up or religion. Personally for me,

culturally it would be hard for me to practice 100% confidentiality. Coming from the Asian culture, we normally share our experiences to other family members. We are also told to not lie and be as truthful as possible. I do sometimes share my experiences and issues that I face during work. This would be frowned upon if my bosses or colleagues knew about this. With confidentiality being compromised, objectivity is also a little compromised since I am no longer holding the company as a priority. With the lack of confidentiality, my integrity is also effected by my actions of talking about a certain case or issue over dinner or brainstorming with my family members.