The Ethics Codes Of Uk - 1928 Words

2 It’s trust-worthy and reliable to have independent and unbiased auditors confirm that an organization’s claims about its financial position and the process behind these claims are true and independent. The most important element for the audit report and opinion should be free bias. In order to achieve this goal, auditors need to be objective. Auditor, as one part of the professional accountancy bodies, is required to obey the ethics codes, which ensure the auditor to be independent. Furthermore, the ethics codes of UK utilize a principle-based framework approach to outline the circumstances and assess whether the appropriate safeguard can be carried out to mitigate the threats in order to achieve acceptable level of independence.†¦show more content†¦However, when the threats are unable to eliminate, the auditor should not carry on reporting auditor opinions. The ethics codes also provide categories of threats of independence. The first one is self-interest threat. This occurs when there is a conflicting between the auditor’s financial or other self-interest and the clients’. The financial or other interest will inappropriately influence the professional auditor’s judgment or behavior. For instance, if the auditor has close business relationship with the audit client, that is a self-interest threat. Furthermore, a potential engagement with an audit client and contingent fees relating to audit engagement are also the examples of self-interest threat. The second one is called the self-review threat. This threat occurs when there are previous judgments or products made by other audit or non-audit organizations. Then the auditor needs to re-evaluate it to issue a new audit opinion. Furthermore, the self-review threat also occurs when the auditor were previously a member of the auditor’s client who made influence over subject matter of the audit report. Then, self-review thread includes preparation of original data used to generate financial statements or preparation of other records that are the subject matter of the audit engagement as well. In the question, Transval Ltd requires the auditor to assist with the preparation of both the company’s corporation tax return and the director’s personal tax