Learning module 10

Ethics and the registered Tax PractitionerLearning Module 10

ICB Junior Bookkeeper: Payroll & Monthly SARS Returns

Main function of ManagementPage 300

Module outline Pg 300

Difference between morals & ethicsPage 302

Business Ethics - Page 303The King Report and business ethics

Code of Ethics – Page 304Requirements for an acceptable code of ethicsProfessional codes of conduct

4

1

2

3


Ethics and AccountingPage 307

Module outline

The role of professional bodies in accountingPage 308

Internal control – page 309Internal controls for the accounting records

5

6

7


Module outline

Ethics in taxation and the Tax PractitionerPage 312Tax evasion and tax avoidanceThe Tax PractitionerHistory of regulating Tax Practitioners in South AfricaRegulation in South AfricaRegistration procedureProfessional body membership in taxation

• How to become a member of SAIT

8


Main function of Management Pg 300

Control Costs• Uncontrolled costs / sunk costs• Controllable costs

• Being late for work• Taking sick leave when not necessary.• Taking extended breaks over lunch or tea-time

Bookkeeping/accounting systems are primarily a system of controlling money

• Money is a scarce resource

Three basic tasksPlanning

Co-ordinating. Control.


MORALS

Rules of behaviour.• Certain kind of behaviour

/acceptable standards of behaviour.

• Laws enforce morals• Following rules & regulations

Thinking or pondering moral behaviour• Being ethical means embracing

moral behaviour in heart and mind

• Understanding why behaviour is right or wrong

• Respecting the rights and needs of others

• Acknowledging one’s own duties and responsibilities

• Assessment of situations, alternatives

• Assessment of consequence of actions

ETHICS

Difference between Ethics & Morals Pg 302

Rules of behaviour

Pondering behaviour


Principles and standards that guide business conduct.

• Manner in which business conducts internal relations• Manner in which business interacts with third parties

Business Ethics Pg 303

Business organisation cannot be ethical or unethical

• Individuals create ethical or unethical reputation• Human decisions

• Individual • management


How managers decide:• What is right• What is wrong

Business Ethics

Cultural values• Common set of values• Code of conduct /code of ethics

• Responsibility to shareholders & financial community

• Relations with customers & suppliers• Employment practices• Responsibility to the community


Report: Code of Corporate Practices and Conduct (King Code)• King Code covers all aspects of good governance

• Accountability• Transparency• Responsible management

Business should compile codes of conduct aligned to mission statements

• Without sound and ethical relationships with stakeholders business will not be sustainable

King Report and business ethics Pg 304

Mervyn King – formed recommendations to prevent unethical business practices


A code of ethics Pg 304

Also known as a code of conduct.

• Contribution towards a profitable organisation.

• Expectations regarding usage & management of resources

• Employment practices

• Responsibility towards the community

Relationships with third parties.• Customers• Suppliers• competitors


• Outlines clear acceptable practices• Outlines clear unacceptable practices• Encourages ethical behaviour at all levels• Provides guidance in difficult decision making• Identified ethical infringements• Assists in resolving conflicts• Enhances ethical reputation of organisation

Requirements for an acceptable code of ethicsPg 305

A code of ethics must be formulated and implement so that it:


Professional codes of conduct – Pg 307

Written rules of conduct & standard behaviour, based on ethical principles for members of a profession.

Impartiality and objectivity

Being openMaking full disclosure(Transparency)

Observing confidentialityDue Diligence


Accountancy profession Pg 307

Objectives

Highest standards of professionalism

Attain highest levels of performance

Meet the expectations of the public


Ethics & Accounting Pg 307

Incorporates business ethics and corporate governance

Non-current assets & asset disposal

Partnership

Cash transactions & Bank Reconciliations VAT

Inventory systems & inventory evaluations

Budgets & Manufacturing costs


• South African Institute of Chartered Accountants (SAICA).

• Continuing professional education• Technical support• Public relations• Nomination of suitable members for

various advisory bodies• Independent Regulatory Board for

Auditors (IRBA)• “watchdog” over training and education

of accounting practitioners• Trainees have legal contracts• Standard of training• Assessing accountants with international

criteria• Trainees must pass examinations and be

registered member• Disciplinary board

The role of professional bodies in accounting Pg 308

Professional Bodies

SAICA

CIMA

IRBA

ICB


• Chartered Institute for Management Accountants (CIMA)

• “Global watchdog”• Ethical behaviour of Management

Accountants and Financial Managers• Professional competence• Confidentiality• Integrity• disclosures

• Institute of Certified Bookkeepers (ICB)• Junior Bookkeepers• Senior Bookkeepers• Technical Financial Accountants• Ethical stands to provide sound, practical

advice for management accountants and managers.

The role of professional bodies in accounting

Professional Bodies

SAICA

CIMA

IRBA

ICB


Internal Control Pg 309

Methods and procedures• Internal controls are intended to ensure that:

• Business is managed in an orderly manner• Assets of enterprise are safeguarded• Resources are used economically and efficiently• Reliable and accurate accounting records• Financial and other reports are done timeously• Fraud is detected and prevented

• Types of internal control• Preventative• Detective• Correct• Directive


Internal controls for accounting recordsPrimary objective of internal controls are:

Valid transactions

Recorded accurately

Complete recording

Transactions classified correctly

• Adequate internal controls:• Reconciliations• Control accounts• Stationery• Budgets


External Auditors Pg 310 / 311

External AuditorsSeparation of duties

Control over source

documents


Ethics in taxation & the Tax Practitioner Pg 312

• Tax evasion• Tax evasion refers to illegal activities undertaken

deliberately• Tax avoidance

• Situation where taxpayer has arranged affairs, legally, within the parameters of the tax act.

Interpretation of ethics from variety of perspectives

Tax evasion

Ethics

Tax avoidance


Tax Practitioner Pg 312

• Practitioner – refers and includes any person rendering advice to any other person in respect of an Act administered by the Commissioner

• Play an important role in the tax system of the country• Assist taxpayers in preparing tax returns• Represent and advise taxpayers regarding communications with SARS• Intermediary between taxpayer and SARS• Regulation of Tax Practitioners


History of regulating Tax Practitioners in South Africa Pg 313

Qualified Tax Practitioners should provide assistance that result in better quality tax returns, and tax compliance

Tax Practitioners should encourage their clients to adopt tax positions which they would not otherwise assume, in order to legally minimise their declared tax

liabilities.

First approachProfessional monopoly

for tax purposes

Second approach restricts certain representative activities to licensed

practitioners

Third approachessentially unregulated

tax profession


Regulation in South Africa Pg 314

• Registration requirements• Encourage compliance• Encourage improved quality of advice to taxpayers

Reasons for regulation• Protection of the public• Increased administrative efficiency of SARS• Improved integrity of the tax system


Non-registration Pg 315

• Advice/assistance solely for no consideration• Advice during a lawsuit involving SARS• Incidental advice• Employee• Under direct supervision of a registered Tax Practitioner.


Controlling BodiesIRBA

Law Society

General Council of the Bar of S.A.

Statutory Body

SARS recognised controlling bodies Pg 316

• CIMA• CSSA• IAC• SAICA• SAIPA• SAIT• ACCA

AdvantagesAnd

Disadvantages of regulation


Registration Procedure Pg 317

• TP-1• Manual or electronic registration• Return form to SARS by handing in or posting• Registration number must be used in all communications


Professional body membership in taxationSAIT

• South African Institute of Tax Practitioners• Non-profit institute• Tax Professionals obtain professional membership

• Professional recognition• Technical assistance• Supporting standards for education and training• Continuing professional development• Updates and changes in tax legislation• Building the brand of SA Tax Professional• Representation with other relevant stakeholders• Networking• Forums


Thank you for listeningAli [email protected]

The EndGood luck

for the exams


mailto:[email protected]

Education

Learning module 10