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A penal bond is a written instrument executed between an obligor and an obligee designed to secure the performance of a legal obligation through the in terrorem effect of the threat of a penalty for nonperformance.
Large public accounting firms perform thousands of audits annually. Ultimately they will find unmodified reports on financial statements that could appear to be misleading. If CPAs fail to modify the audit report on financial statements that are materially misstated, investors and firm creditors may experience substantial losses.
Accounting ethics is primarily a field of applied ethics and is part of business ethics and human ethics, the study of moral values and judgments as they apply to accountancy. It is an example of professional ethics .
The penalty rule is an interference with freedom of contract. It undermines the certainty which parties are entitled to expect of the law. Diplock LJ was neither the first nor the last to observe that “The court should not be astute to descry a ‘penalty clause’”: Robophone at p 1447.
The International Ethics Standards Board for Accountants (IESBA) develops and promotes the International Code of Ethics for Professional Accountants (including International Independence Standards). The IESBA also supports debate on issues related to accounting ethics and auditor independence.
The term clawback or claw back refers to any money or benefits that have been given out, but are required to be returned (clawed back) due to special circumstances or events, such as the monies having been received as the result of a financial crime, or where there is a clawback provision in the executive compensation contract.
For a contractual "penalty" clause to be valid, one must show that it was drawn up after a bona fide attempt to estimate loss in advance of the breach. For example, a motorway construction contract may have an estimated finish date with a "penalty clause" for every day late; but provided that this date is realistic and the "penalty" is a ...
An accounting irregularity is an entry or statement that does not conform to the normal laws, practises and rules of the accounting profession, having the deliberate intent to deceive or defraud. Accounting irregularities can consist of intentionally misstating amounts and other information in financial statements, or omitting information ...