The way audits are conducted by firms of professional auditors has become more regulated over the years, with the overarching objective of this regulation being to ensure that audits are conducted, not only to the highest standards befitting a professional firm, but also in accordance with strict ethical guidelines, explains Steve Collings.
The Ethical Standards (ESs) issued by the Auditing Practices Board (APB) are compulsory for firms that undertake audit work for their clients. Specifically, the ESs outline matters such as:
- How audit firms set policies and procedures to ensure that all those in the firm that carry out audit work do so with integrity, objectivity and independence
- Financial, business, employment and personal relationships
- Long association with the audit client
- Fees, remuneration and evaluation policies, litigation, gifts and hospitality
- Non-audit services provided to the audit client
It is worth mentioning that the ESs are as vital as the International Standards on Auditing (ISAs) themselves and must be fully understood and implemented within the firm.