SCRIPT

Code of Ethics for Professional Accountant

-for the Table of Contents
PART 1: COMPLYING WITH THE CODE
PART 2: PROFESSIONAL ACCOUNTANT IN BUSINESS(PAIBs)

Requirements of the code for professional accountant in public practice

PART 3: PROFESSIONAL ACCOUNTANT IN PUBLIC PRACTICE (PAPPs)

Before we proceed in complying with the code
Let’s define first What is code of ethics?
First we define what is Ethics
So the term ethics has been defined in various ways but most of the definition had included the phrase

 a set of concepts and principles that guide us determining what behavior helps or harm an
individual and/ or the society
so basically, it is a principle that guide us to make a positive impact through our decisions and
actions. It plays an important role not only in our personal lives but also in business. We are all
encouraged to make ethical choices and apply ethics in all areas of our lives.

In accountancy profession Code of ethics

 a set of moral principles, rules of conduct or values. The basic objective of the code is to assist
members in the understanding the difference between right and wrong and in applying that
understanding to their decisions.
 It is applied when an individual has to decide from various alternatives regarding moral
principles.

IMPORTANCE

Next lets discuss the reason why the accountancy profession needs to adapt a code of ethics

One of the responsibility of an auditor is to serve the public so code ethics is important to act in
the public interest
1. To act in the public interest (read module)

OBJECTIVES:
1. To work to the highest standards of profession
2. To attain highest levels of performance
3. To meet the public interest requirements
4 BASIC NEEDS
 1. Credibility
2. Professionalism
3. Quality of services
4. Confidence
2. All recognized profession has developed code of professional ethics

The word Profession is define as vocation founded upon specialized educational

training, the purpose of which is to supply objective counsel and service to others.

Characteristics
1. Mastery
2. Adherence
3. Acceptance

4. The profession’s attempt to achieve of common interest

Overarching Requirements of The Code

Requirement Discussion
Fundamental principles of 1. Integrity
ethics 2. Objectivity
3. Professional Competence and Due Care
4. Confidentiality
5. Professional Behavior
Conceptual framework the professional accountant shall apply the framework in order to
identify, evaluate and address threats to compliance with the
fundamental principles.

International independence Established for audits, reviews and other assurance engagements
standards regarding threats to independence specific to these engagements.
Definitions
Professional Accountant (PA) refers to an individual who holds a valid certificate of Registration and
Current Professional Identification Card issued by Board of Accountancy (BOA) and Professional
Regulation Commission (PRC) whether he/she be in pubic practice, industry or commerce, the public
sector, or education.
Professional Accountant in Business (PAIB) is a professional accountant working in areas such as
commerce, industry, services, the public sector, education, the not-for-profit sector, or in regulatory or
professional bodies
Professional Accountant in Public Practice (PAPP) is a professional accountant, irrespective of
functional classification in a firm that provides professional services.
PART 1: COMPLYINGWITH THE CODE
(DIAGRAM)
FUNDAMENTAL PRINCIPLES
1. Integrity
2. Objectivity
3. Professional Competence and Due Care
4. Confidentiality
5. Professional Behavior
(DIAGRAM)
CONCEPTUAL FRAMEWORK
1. Self-interest threat
2. Self-review threat
3. Advocacy threat
4. Familiarity threat
5. Intimidation threat

Three-step approach for Pas to:

1. Identify
2. Evaluate
3. Address
*When applying the conceptual framework, the PA shall:
1. Have an inquiring mind
2. Exercise professional judgement
3. Use the reasonable and informed third party test
Identify threats
1. Self-interest threat
2. Self-review threat
3. Advocacy threat
4. Familiarity threat
5. Intimidation threat
Evaluate threats
Acceptable Level- level at which a PA using the reasonable and informed third party test would likely
conclude that the accountant complies with the fundamental principles.
Address threats
a.) Eliminating
b.) Applying safeguards
c.) Declining or ending
Consideration for assurance engagements
1. Firm culture
 2. Independence
3.

Independence of mind Independence of appearance

The state of mind that permits the expression of a The avoidance of facts and circumstances that are
conclusion without being affected by influences so significant that a reasonable and informed third
that compromise professional judgement, thereby party would be likely to conclude that a firm’s or
allowing an individual to act with integrity, and an audit or assurance team member’s integrity,
exercise objectivity and professional skepticism. objectivity or professional skepticism has been
compromised.
4. Professional skepticism
a. questioning mind
b. being alert to condition
c. critical assessment
PART 2: PROFESSIONAL ACCOUNTANTS IN BUSINESS (PAIB)

Circumstance Main threat/s created Main fundamental

principle/s affected
Conflict of interest Self-interest threat Objectivity
Preparation and Self-interest All
presentation of information
Acting without sufficient Self-interest Professional competence
and due care
Financial interest, Self-interest Objectivity; confidentiality
compensation and
incentives
Inducements, including gifts Self-interest; familiarity; Integrity; Objectivity;
and hospitality intimidation professional behavior
Responding to non- Self-interest; intimidation Integrity; professional
compliance with laws and behavior
regulations (NOCLAR)
Pressure to breach the Intimidation all
fundamental principles

CONFLICT OF INTEREST
A conflict of interest occurs when an individual’s personal interests – family, friendships,
financial, or social factors – could compromise his or her judgment, decisions, or actions in the
workplace.