Auditing Ethics.

Business dictionary defines ethics as "the basic concepts and fundamental principles of decent human conduct."
To some, ethics are natural and inborn while to others, they are characters that must be learnt in school. However the big question is: Why do some people decide to do wrong while others do what is required of them?

Public accounting is a profession. A public accountant should therefore act in the interest of the public. This means that some ideas brought out may be contrary to the best interest of the company. Ethical dilemmas will always arise. Just like other occupations, public accountants take ethics seriously.
It is easy to do something simply because other accountants are doing doing but you need to judge and ask yourself, "Is what I am doing the right thing?"

Let me highlight on how such ethical dilemma can be controlled:

1. Obtain the facts. Once you have identified the issues at hand, get facts about them.
2. Identify ethical issues. Separate ethical issues from facts.
3. Determine who is affected by the dilemmas.
4. Identify ways to solve the dilemmas.
5. Weigh the outcomes of each dilemma.
6. Take action.

Some of the key rules that distinguish auditors from bookkeepers are as follows:

1. The auditor must maintain his independence. He must issue results that are unbiased
2. Confidentiality of information, Public accountants should not disclose any confidential information concerning their clients except under special circumstances such as when the client has accepted to such disclosure.
3. Integrity and due care. Public accountants should work with honest. If the auditor gives a wrong opinion, he can easily mislead the management and investors who make decisions basing on those financial statements. Therefore he can be sued.
4. Objectivity. Auditors should perform their services with an objective state of mind.
5. Competence. Auditors should sustain their competence by informed with the current state of the organisation and complying with developments in professional standards.
6. Communication with predecessors. An auditor should not accept an engagement with respect to the practice of public accounting or the public practice of a function not consistent with public accounting, where the auditor is replacing another auditor, without first communicating with such person and inquiring whether there are any circumstances the auditor should take into account which might influence the auditor's decision whether or not to accept the engagement.

If those rules are not followed, the penalties may include:

1. Public humiliation.
2. Monetary fines.
3. Restrictions to practicing auditing.
4. Upgrade quality control which is very costly.

REFERENCE:
http://www.businessdictionary.com/definition/ethics.html#ixzz2VnApBWLB