International Federation of Accountants

Code of Ethics for Professional Accountants

Overview
International Federation of Accountants
International Federation of Accountants
International Federation of Accountants
International Federation of Accountants
Fundamental Principles (110)
• Integrity

– To be straight forward and honest in all

professional and business relationships

• Objectivity

– To not allow bias, conflict of interest or undue

influence of others to override professional or
business judgments
Fundamental Principles
• Professional Competence and Due Care
– To maintain professional knowledge and skill
at the level required to ensure competent
professional services based on current
developments in practice, legislation and
techniques
– To act diligently in accordance with applicable
technical and professional standards
Fundamental Principles
• Confidentiality
– To refrain from disclosing confidential information
acquired as a result of professional and business
relationships without proper and specific authority to
disclose unless there is a legal or professional right or
duty to disclose

– To refrain from using confidential information

acquired as a result of professional and business
relationships for personal advantage or the advantage
of third parties
Fundamental Principles
• Professional behavior
– Obligation to comply with relevant laws and
regulations and avoid any action that discredits
the profession
Conceptual Framework Approach – Threats
and Safeguards
Threats
• Self-interest
• Self-review
• Advocacy
• Familiarity
• Intimidation
Self-interest threat – the threat that a financial
or other interest will inappropriately influence
a professional accountant’s judgment or
behavior;
Self-review threat – the threat that a
professional accountant will not appropriately
evaluate the results of a previous judgment
made; or an activity performed by the
accountant, or by another individual within
the accountant’s firm or employing
organization, on which the accountant will
rely when forming a judgment as part of
performing a current activity
Advocacy threat – the threat that a
professional accountant will promote a
client’s or employing organization’s position
to the point that the accountant’s objectivity is
compromised;
Familiarity threat – the threat that due to a
long or close relationship with a client, or
employing organization, a professional
accountant will be too sympathetic to their
interests or too accepting of their work; and
Intimidation threat – the threat that a
professional accountant will be deterred from
acting objectively because of actual or
perceived pressures, including attempts to
exercise undue influence over the accountant.
Evaluating Threats

When the professional accountant

identifies a threat to compliance with the
fundamental principles, the accountant
shall evaluate whether such a threat is
at an acceptable level.
Addressing Threats

a.Eliminating the circumstances, including

interests or relationships, that are
creating the threats;
b.Applying safeguards, where available
and capable of being applied, to reduce
the threats to an acceptable level; or
c.Declining or ending the specific
professional activity.
Acceptable Level

An acceptable level is a level at which a

professional accountant using the
reasonable and informed third party test
would likely conclude that the accountant
complies with the fundamental principles.
Safeguards
Safeguards are actions, individually or in
combination, that the professional accountant
takes that effectively reduce threats to
compliance with the fundamental principles
to an acceptable level.
Prohibitions

When safeguards are never adequate

Objectives of the Professional Accountant
in Relation to Non-compliance with Laws
and Regulations
260.5 A2 Examples of laws and regulations which this
section addresses include those that deal with:
● Fraud, corruption and bribery.
● Money laundering, terrorist financing and proceeds of
crime.
● Securities markets and trading.
● Banking and other financial products and services.
● Data protection.
● Tax and pension liabilities and payments.
● Environmental protection
• Public Safety
Part 2 – Professional Accountants in Business

• Potential conflicts
• Preparation and reporting of information
• Acting with sufficient expertise
• Financial interests
• Inducements, Including Gifts and Hospitality
• Responding to Non-compliance with Laws and
Regulations
• Pressure to Breach the Fundamental Principles
Part 3 – Professional Accountants in Public
Practice
• Professional Appointment
• Conflicts of Interest
• Second Opinions
• Fees and Other Types of Remuneration
• Marketing Professional Services
• Inducements, Gifts and Hospitality
• Custody of Client Assets
• Responding to Non-Compliance with Laws and Regulations
 Independence for Audit and Review
Engagements
• Firm includes network firm, except where
otherwise stated
• Independence of mind and independence
in appearance
• Public interest entities: additional provisions in
Section 290 that reflect the extent of public interest
in certain entities
Independence for Audit and Review
Engagements – cont’d
• Documentation: conclusions regarding
compliance with independence requirements,
and substance of any relevant discussions
that support those conclusions
Independence for Audit and Review
Engagements – cont’d
• Financial interests
• Loans and guarantees
• Business relationships
• Family and personal relationships
• Employment with an audit client
• Temporary staff assignments
Independence for Audit and Review
Engagements – cont’d
• Recent service with an audit client
• Serving as a director or officer of an audit client
• Long association of senior personnel
(including partner rotation) with an audit client
Independence for Audit and Review
Engagements – cont’d

• Provision of non-assurance services to audit clients

– Management responsibilities
– Preparing accounting records and financial statements
– Valuation services
– Taxation services
– Internal audit services
Independence for Audit and Review
Engagements – cont’d
• Provision of non-assurance services to audit clients
– IT systems services

– Litigation support services

– Legal services

– Recruiting services

– Corporate finance services

Independence for Audit and Review
Engagements – cont’d
• Fees
• Compensation and evaluation policies
• Actual or threatened litigation
• Reports that include a restriction on use
or distribution
Independence for Other Assurance
Engagements
• Assurance engagements that are not audit or review
engagements
• Include related entities when reason to believe
relevant to independence
• Include network firms when reason to believe
relevant to independence
Independence for Other Assurance
Engagements
• Assertion-based assurance engagements
– Independence required from assurance client (party responsible for
the subject matter information, and which may be responsible for
the subject matter)
– When client not responsible for subject matter evaluate the threats
firm has reason to believe created by interests and relationships
with party responsible for subject matter

• Direct reporting engagements

– Independence required from assurance client (party responsible
for the subject matter)
Independence for Other Assurance
Engagements

• Multiple responsible parties

– Firm may take into account whether interest
or relationship with a particular responsible
party creates a threat. Consider:
• Materiality of subject matter information (or subject matter) for
which the particular responsible party is responsible

• Degree of public interest associated with engagement

END OF PRESENTATION
International Federation of Accountants
www.ifac.org