Explain in detail the professional ethics of an auditor and its importance to the auditing perfession. Provide examples of five ethical dilemmas that could arise during the audit process and...

Introduction – What is Auditing?
Auditing is a process whereby financial statements of a business organization is reviewed and
examined by a professional or specialized entity. In other words, it is a systematic review and
examination of financial statements and accounts of a business firm or company. This review
and examination holds considerable importance in the business world as it provides insight
regarding financial soundness and position of a business firm. Main objectives of the auditing
relates to testing reliability and authenticity of financial records, disclosing clear and fair view of
the company’s affairs, detecting and rectifying errors in the financial functioning.
Professional Ethics for an Auditor
The American Institute of Certified Public Accountants issues AICPA Code of Professional
Conduct which is a collection of codified statements. These statements provide details about a
Certified Public Accountant’s ethical and professional responsibilities. Professional ethics are the
two words which are central to auditing profession. The professional ethics is laid down to guide
the professional and personal behavior of members. The professional ethics provides the
guidelines which are to be complied with auditors in their course of professional conduct. The
Code formulates standards for auditor independence, objectivity, integrity, responsibilities and
duties towards clients and colleagues and acts discreditable to accounting profession. The
AICPA is responsible for drafting, revising and reissuing the code annually on June 1. In the
field of auditing there are five ethical standards which must be followed by auditors and these are
listed as follows:
ES1: Integrity, objectivity and independence
ES2: Financial, business, employment and personal relationships
ES3: Long Association with the Audit Engagement
ES4: Fees, remuneration and evaluation policies, litigation, gifts and hospitality
ES5: Non-audit services provided to audit clients
Importance of...