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Learning Module 10. Ethics and the Tax Practitioner
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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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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.
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
• 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:
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
Accountancy profession Pg 307
Objectives
Highest standards of professionalism
Attain highest levels of performance
Meet the expectations of the public
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
• 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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
• 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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
External Auditors Pg 310 / 311
External AuditorsSeparation of duties
Control over source
documents
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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.
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
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
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns
Thank you for listeningAli [email protected]
The EndGood luck
for the exams
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns