MIA BY LAWS

Functions MIA by Laws

- Provide standard of conduct in daily professional life
- Important for gaining public confidence in auditors’ services
- Exhibit the highest standards of ethics, professionalism and professional conduct that are expected
of the profession

Section 110 – Fundamental Principles

* Professional accountants shall comply with the following fundamental principles of ethics:
- Integrity
- Objectivity
- Professional Competence and Due Care
- Confidentiality
- Professional Behaviour
* Auditor may face threat to compliance with fundamental principles when perform services.
* Auditor should identify threat, apply safeguards, eliminate or reduce the threat to acceptable level
and ensure comply with fundamental principles.

Section 111 – Integrity = Honesty

* All professional accountants to be straightforward and honest in professional and business
relationships.
* A professional accountant must not be involved with any reports, returns, messages, or other
information if they know that the information:
(a) Has an important false or misleading statement;
(b) Includes statements or information provided without care or thought;
(c) Leaves out or hides necessary information that should be included, which would be misleading.

If a professional accountant finds out that they have been involved with such information, they must
take actions to separate themselves from that information.

Section 112 – Objectivity

*Auditor should not let personal biases, conflicts of interest, or others' pressure affect their
professional judgment.
*Professional accountants should not provide their services if there is a situation or relationship that
could make them biased or unduly influenced in their professional judgment for that particular
service.

Section 113 – Professional Competence and Due Care

* A professional accountant has to be good at their job and take it seriously. They need:
(a) Learn and keep up with the knowledge and skills needed to provide good service to their clients or
the organization they work for. They should know the current rules and standards in their field.
(b) Work hard and follow the right rules and standards that apply to their job.
* Being competent means using their knowledge and skills wisely when they do their work for clients
or the organization they work for.

* Accountants should do their assignments carefully, thoroughly, and on time.

* Accountants should make sure that the people working under them have the right training and
supervision.
* If there are limitations to the services or activities provided, the accountant should let their clients,
organization, or others know about them, when it's appropriate.

Section 114 – Confidentiality

* Accountant must not disclose any confidential information outside the firm without proper authority
unless it is legal and professional right or duty to disclose
* Accountant must not use confidential information for personal advantage or third parties.
* Must maintain confidentiality even in a social environment, being alert with any information
disclose to especially to family member.
* Maintain confidentiality of information within the firm.
* Maintain confidentiality of information disclosed by a prospective client.
* Not use or disclose any confidential information for professional or business relationship after that
relationship has ended.

Circumstances to Disclose Information

a. Disclosure Required by Law: -
i. Production of documents or other provision evidence for legal proceedings.
ii. Disclose information to public authorities regarding the discovered violations of law.

b. Disclosure is permitted by law and is authorized by the client or the firm.

c. When it's not against the law, there is a professional obligation or right to disclose information in
order to:
(i) comply with quality reviews of professional bodies'
(ii) respond to inquiries or investigations by regulatory or professional bodies;
(iii) defend the interests of professional accountants in legal proceedings; or
(iv) comply with technical and professional standards, including ethical requirements.

Section 115 – Professional Behaviour

* Should not engage with any activity that affect or may affect the integrity and reputation of the
profession
* Conduct that may disrepute the profession.
* For marketing and promotional activities, accountant should be honest and truthful and not make:
i). Exaggerated claims for the services offered or the qualification/experience of the accountants.
ii. Underestimating the work of others or making unfounded comparisons.

Section 120 – Conceptual Framework

Approach for Accountant: -
i. Identify threats to comply with fundamental principles.
ii. Evaluate the threats.
iii. Eliminate or reduce the threat to acceptable level.

Types of Threats
a. Self-interest threat: - threats that financial or other interests will influence a professional
accountant’s judgment or behavior.
E.g.: quoting a low fee to get a new engagement, have a close business relationship with client, have
access to confidential information that can be used for personal.
b. Self-review threat: - threat that will lead professional accountant will not properly evaluate the
results of previous judgement made.
E.g.: issue an assurance report, prepared original data used to generate records that matter of the
assurance engagement.

c. Advocacy threat: - threat that will promote a client to the extent that the accountant’s objectivity is
compromised.
E.g.: promote interest of or shares in a client, act as an advocate on behalf of client in litigation,

d. Familiarity threat: - threat that due to long or close relationship with client and professional
accountant will be sympathetic to accepting their work.
E.g.: have a close or immediate family member who is a director or officer of the client, audit team
have long associate with audit client.

e. Intimidation threat: - threat that will be prevented from acting objectively due to real or perceived
pressure.
E.g.: being threatened with dismissal from engagement, feeling pressured to agree with judgement of
client due to expertise.

Eliminate or Reduce Threat

i. Eliminate circumstances include interest or relationship that creating the threat.
ii. Apply safeguards to the acceptable level.
iii. Decline or end the specific professional activity.

Section 300 – Apply Conceptual Framework

*REFER E.G. IN EACH THREATS*
Example of Safeguards: -
a. Have an appropriate reviewer from who was not a member of the team review.
b. Separate teams when dealing with confidential matters.
c. Disclose to client any referrals fees or commission arrangement received.
d. Involve another firm to perform or re-perform part of the engagement.
Section 310 – Conflict of Interest
Circumstances Might Create Conflict: -
a. Provide advice to 2 clients at the same time where the clients are competing.
b. Represent 2 client in the same matter who are in a legal dispute.
c. Provide services to a seller and buyer in relation to the same transactions.
Section 320 – Professional Appointments
Client Acceptance
- Should investigate the background and business activities of audit client.
- Should investigate any issues that would threaten compliance of fundamental principles.
- To accept the appointment, auditor need to eliminate or reduce the threat to an acceptable level or
auditor should decline the appointment.

Engagement Acceptance
- Should accept audit engagement when he is competent to perform.
- Acquire knowledge of relevant industries.
- Obtain experience with regulatory and reporting requirement.
- Assign sufficient staff with necessary competencies.

Section 321 – Second Opinion

Example of Safeguards: -
a. With the client's permission, obtain information from current or previous accountants.
b. Describe the limitations surrounding in communication with the client.
c. Provide the current or previous accountant with a copy of the opinion.

Section 330 – Fees or Other Types of Remuneration

Fees charged should be fair to the: -
a. skills and knowledge required for the work.
b. level of training and experiences of the person that engage on the work.
c. time that occupied by each person engaged.
d. degree of responsibilities and urgency of the work.

Factors May Create Self-Interest Threats

 a. A large portion of audit firm’s total earning from one client: - if the total fee generated exceed 15%
of the firm total fees in each year over 2 consecutive years.
b. Overdue fee of an audit client: - payment should be required before the report is issued or before
starts new engagement.
c. Contingent fee: - auditor must have clear understanding with client on the scope and fee of the audit
engagement.

Section 340 – Inducements include Gifts and Hospitality

* Accepting gifts from audit clients can create threats of self-interest, familiarity and intimidation, but
is generally permitted if the value is clearly immaterial.
* If the gifts are significant and cannot be reduced, auditor should not accept the gift.

Example of Safeguards: -
a. Be transparent with senior about client offering.
b. Register inducement in a log and monitored by senior.
c. Donate the inducement to charity after receive and disclose the donation.
d. Have an appropriate reviewer.
e. Reimburse the cost of the inducement such as hospitality.

Section 400 – Apply the Conc. Framework to Independence for Audit and Review Engagement
- Independence of mind: -