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To bound auditors around the world to achieve objectives of engagement effectively and also providing users of financial statements with reasonable assurance and making them responsible for other aspects of the profession auditors have to abide by the requirements of code of ethics.Principles laid out in code of ethics are also know as fundamental ethical principles and auditor is required to assure all such principles are fulfilled.Fundamental principles include honesty or integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.However, during the practice while carrying requirements of engagement auditors may face or they expect to face such situations when the will not be able to fulfill ethical requirements.Advocacy threat arises when auditor (most of the time unintentionally) supports the opinion or position (of the client most of the time) to the extent that it is not supported with relevant evidence or simply auditor supported the opinion beyond the degree of objectivity.bank asked client to file an auditor’s report on specific matters for loan contract and in that report auditor mentioned sound financial position of the entity without sufficient appropriate evidence., under a separate arrangement auditor gave the evaluation of internal control system as effective.Now during the audit it is found internal control system is not that effective as was expected.
Self-review threat arises when auditor is asked to examine or report on his own assessment, opinion, judgement or work and thus he is basically self reviewing his work.After 23 years in room 101, across from the main office, Mrs.Albany returns to start a new school year to find that she has been assigned to room 411, four flights up in a building with an elevator that rarely works. Albany, and her schedule requires that she walk up the stairs several times throughout the day. Mitchell, who has been teaching 8th grade for 14 years, is informed that he has been assigned to teach 1st grade. Dale, the school’s principal, sits in the back of Ms.Principals most often talked about these practices in discussions of the most significant roadblocks to school improvement.The management of teachers — recruitment, hiring, evaluation, professional development, and removal — was often the focus of the roadblocks conversation.