Importance of Ethics and Education to Understand the Audit Mission

Importance of Ethics and Education to Understand the Audit Mission

Melinda Timea Fülöp, George Silviu Cordoș, Nicolae Măgdaș
Copyright: © 2020 |Pages: 18
DOI: 10.4018/978-1-7998-0178-8.ch011
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The chapter brings forward the discussion of how the level of accounting and audit knowledge has an impact on how stakeholders understand the audit mission, the auditor's responsibilities, and the message conveyed by the audit report, even when considering the new and extended reports. The preliminary results of this analysis indicate that audit education influences the audit expectation gap (the reasonableness gap), and if measures would be taken to upsurge the stakeholder's levels of education in auditing and accounting, combined with new and revised standards, the audit expectation gap can be reduced. In this sense, the International Accounting Education Standards Board (IAESB) is an independent standard-setting body that serves the public interest by establishing standards in the field of professional accounting education that prescribe technical competence and professional skills, values, ethics, and attitudes.
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In any liberal profession, and even more in the field of the accountancy profession, due to the nature of its problems, in the context of the globalization of national economies, it is necessary to lay them on fundamental ethical principles meant to ensure the highest standards of professionalism.

Globalization has become a topical concept in the last decade in social, economic sciences, and last but not least, it gives new dimensions to the role that the accounting profession plays in combating negative phenomena in national economies.

Accounting is not only an instrument of knowledge and management of the separate patrimonial economic values, but it is also a social phenomenon, crossed by the contradictions of society, becoming a stake for various social protagonists, each trying to take advantage of its interests. The product it delivers can only be the result of a compromise between expectations and multiple exigencies. It does not fully satisfy all users, which, despite all of them, has not yet altered its prestige or authority.

To promote ethical conduct within the profession, the most appropriate protective measures will be taken to eliminate the risks of conflict of interest that would harm the public interest and the role played by this professional category. Therefore any threat that would discredit in any way the profession is required to be neutralized.

Often formal definitions have the undesirable effect of making the precise meaning of some terms obscure. At first glance, it is easy to understand that “ethics” is an area that seeks to clarify the moral issues that are rooted in the work of organizations in a society that embraces the system of a market economy characterized by pluripartitism and pluripropriety.

This refers to principles that define fair, correct and appropriate behaviour. Ethical principles do not always dictate a single course of action but offer means of assessment and decision-making among alternatives.

Thus, on one hand, “ethics is the science that studies the moral principles, their origin, nature, essence, development and content” (Marcu & Maneca, 1978) and, on the other hand, “ethics is the ensemble of rules, values and moral norms that regulate the behavior of individuals in society and / or determine their obligations in general, or in a particular field of activity, in particular “(Gonzalez, 2000).

Since ethics is the science that studies moral principles, we also need to define the concept of morality to highlight the differences between the two concepts. A moral is a form of social consciousness that reflects and fixes ideas, thoughts, beliefs about individual behaviour in society.

Although related, ethical and moral concepts have different origins and substances: ethics is moral theory and science, while moral is the subject of ethics. The ethical name is of Greek origin, while the moral originates in the Latin word mos-moris (morav-moravuri), from which the moralistic term, the modern etimony of the moral term (Grigoraş, 1999) appeared.

One of the theories of ethics is Kohlberg's moral development model (Kohlberg, 1969). It presents moral development as a series of six progressive stages that describe the logic used in decision-making in situations involving ethical components. In Kohlberg's model, the individual level of moral development is at a distinct standard at any given point.

Kohlberg was the first one that introduces a method of assessing moral reasoning, presenting to the subject a series of dilemmas in the form of a series of stories, each of which puts a specific moral problem. Maybe the best known is “Heinz's dilemma”:

Key Terms in this Chapter

Due Care: Degree of care that an ordinary and reasonable person would normally exercise, over his or her own property or under circumstances likes those at issue.

Reliability: The quality of being trustworthy or of performing consistently well the degree to which the result of a measurement, calculation, or specification can be depended on to be accurate.

Confidentiality: The state of keeping or being kept secret or private.

Integrity: The quality of being honest and having strong moral principles; the state of being whole and undivided.

Objectivity: The quality of being objective.

Professional Competence: The broad professional knowledge, attitude, and skills required in order to work in a specialized area or profession.

Corporate Governance: The processes by which companies are directed and controlled. Levels of disclosure differ worldwide but might include information on board composition and development, accountability and audit and relations with shareholders.

Professional Behavior: A series of actions deemed acceptable in the workplace. These methods of interaction are dictated by concepts like courtesy, civility and good taste. Professionalism is specific to the industry's business inhabits, the state where a corporation resides and the people that staff its operations.

Service quality: An assessment of how well a delivered service conforms to the client’s expectations.

Professionalism: The competence or skill expected of a professional the practicing of an activity, especially a sport, by professional rather than amateur players.

Ethics: Moral principles that govern a person's behavior or the conducting of an activity the branch of knowledge that deals with moral principles.

Credibility: The quality of being trusted and believed in the quality of being convincing or believable.

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