Learning Module 10. Ethics and the Tax Practitioner

1. Ethics and the registered Tax Practitioner
Learning Module 10
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2. Main function of Management
Page 300
Module outline Pg 300
Difference between morals & ethics
Page 302
Business Ethics - Page 303
The King Report and business ethics
Code of Ethics – Page 304
Requirements for an acceptable code of ethics
Professional codes of conduct
4
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2
3
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3. Ethics and Accounting
Page 307
Module outline
The role of professional bodies in accounting
Page 308
Internal control – page 309
Internal controls for the accounting records
5
6
7
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4. Module outline
Ethics in taxation and the Tax Practitioner
Page 312
Tax evasion and tax avoidance
The Tax Practitioner
History of regulating Tax Practitioners in South Africa
Regulation in South Africa
Registration procedure
Professional body membership in taxation
• How to become a member of SAIT
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5. 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 tasks
Planning
Co-
ordinating.
Control.
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6. 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
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7. 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
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8. 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
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9. 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
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10. 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
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11. • 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 ethics
Pg 305
A code of ethics must be formulated and implement so that it:
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12. 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 open
Making full disclosure
(Transparency)
Observing
confidentiality
Due Diligence
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13. Accountancy profession Pg 307
Objectives
Highest standards of
professionalism
Attain highest levels of
performance
Meet the expectations
of the public
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14. 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
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15. • 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
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16. • 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
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17. 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
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18. Internal controls for accounting records
Primary objective of internal controls are:
Valid
transactions
Recorded
accurately
Complete
recording
Transactions
classified
correctly
• Adequate internal controls:
• Reconciliations
• Control accounts
• Stationery
• Budgets
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19. External Auditors Pg 310 / 311
External AuditorsSeparation of
duties
Control over
source
documents
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20. 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
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21. 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
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22. 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 approach
Professional monopoly
for tax purposes
Second
approachrestricts
certain representative
activities to licensed
practitioners
Third approach
essentially unregulated
tax profession
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23. 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
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24. 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.
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Controlling Bodies
IRBA
Law Society
General Council of the Bar of S.A.
Statutory Body

25. SARS recognised controlling bodies Pg 316
• CIMA
• CSSA
• IAC
• SAICA
• SAIPA
• SAIT
• ACCA
Advantages
And
Disadvantages of
regulation
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26. 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
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27. Professional body membership in taxation
SAIT
• 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
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28. Thank you for listening
Ali Engelbrecht
aengelbrecht@varsitycollege.co.za
The End
Good luck
for the
exams
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