Audit of Ethics Codes

In 1886 the first law of chartered accountants was passed in the USA, which started the process of formation of auditing firms. In 1887 the American Association of Auditors was founded, and in 1896 auditing activity was regulated by law in the state of New York – in particular the auditor position could be held by a certified accountant, who had successfully passed the exam in his specialty at New York University and had obtained a special license on the right to be engaged in auditing activity.Ethical requirements for members of professional associations are not mandatory. But many professional organizations require their members to submit a written or oral report at the end of the year on their compliance with the standards of professional conduct.Codes of ethics of different professional organizations differ in structure and content. But the underlying concepts proclaimed in the ethical standards of the leading accounting professional associations in the US, UK and Australia are the same.In the U.S., U.K. and Australia the measure of accountants' professionalism is assessed against established standards of ethics and responsibility for the public interest. Therefore, each professional organization of accountants or auditors in English-speaking countries has its own code of ethics (Haeridistia, Fadjarenie, 2019).The current code of ethics of the American Institute of Certified Public Accountants sets forth the following moral standards:– A member must be objective and independent in the performance of official duties;– Patronage using coercion, excessive authority, and unfair advertising are prohibited;– Counseling involving personal skills is permitted;– Participation in commission sales is prohibited, except for certain activities (e.g., computer and data processing services);– Combining and extortion are strictly prohibited.Such facts are considered a gross violation of professional ethics.The purpose of the U.S. Institute of Financial Accountants' Code of Ethics (1987) is to provide such guidance and such rules, violation of which may be accompanied by a fine.Three of the rules in the Institute of Financial Accountants' Code of Ethics focus on the description of owner's equity. The employer's profits cannot include the accountant's share, i.e., the accountant cannot receive a bonus or surcharge for financial results that are the result of a skillfully used methodology.The accountant may not share his remuneration with employees of other services of the company.Client money managed by the accountant must always be segregated from the accountant's own funds, both in his accounts and in the manner in which they are invested. In order to make any payments from a client's account, the accountant must first submit documents to the client for approval.The code's provisions on advertising and professional education are not insignificant on the ethical side. They state that the accountant should not promote himself, but should carry out all work with high quality and skill. Advertising should not be abused. Even accountants with excellent professional credentials should avoid making extravagant statements and alluding to the level of their fees. All accountants are advised to regularly improve their professional education.In case of ethical violations, the Board of the Institute may temporarily terminate, limit or revise the membership of an accountant in its ranks or impose other sanctions, as the case may be.The emergence of auditing is related to the distribution of interests between those who are directly involved in the management of the enterprise (administration, managers) and those who invest in its activities (owners, shareholders, investors). Shareholders wanted to be sure that the statements, which are provided by the administration, fully reflect the real financial condition of the enterprise. To verify the correctness of the financial information and to confirm the financial statements, people were invited who, according to the shareholders, could be trusted. The main requirement for the auditor was his unconditional honesty and independence. Theseaspectsarestillrelevanttoday (Martin, 2007).ConclusionIn conclusion, the auditors' code of ethics is an important tool for ensuring the professional responsibility and ethical conduct of auditors. It establishes the standards of conduct and professional responsibility that are necessary to ensure the reliability and credibility of companies' financial statements.Independence, confidentiality, objectivity, competence and integrity are the key principles of the auditors' code of ethics. Auditors must abide by these principles in their work to ensure the reliability and credibility of audit results.Adherence to the auditors' code of ethics also helps protect the public interest and ensure transparency in company financial statements. Auditors should act in the public interest and comply with laws and professional ethics.Overall, the auditors' code of ethics is a necessary tool to ensure auditors' professional responsibility and ethical behavior. Compliance with this code helps ensure the reliability of financial statements and the protection of the public interest. Therefore, auditors should strictly follow this code and observe the principles of professional ethics in their work.ReferencesArdelean A. Auditors’ ethics and their impact on public trust //Procedia-Social and Behavioral Sciences. – 2013. – № 92. – p. 55-60.Bulgakova L. I. Audit in Russia: mechanism of legal regulation. - WoltersKluwer Russia, 2005.Campbell T., Houghton K. Ethics and auditing. – ANU Press, 2005. – С. 354.Haeridistia N., Fadjarenie A. The effect of independence, professional ethics & auditor experience on audit quality //International Journal of Scientific & Technology Research. – 2019. – V. 8. – №. 2. – p. 24-27.Martin R. D. Through the ethics looking glass: Another view of the world of auditors and ethics //Journal of business ethics. – 2007. – № 70. – p. 5-14.Russian Auditors' Code of Ethics (approved by the Auditing Council of the Russian Ministry of Finance, Minutes #56 of May 31, 07)