Professional Documents
Culture Documents
Code of ethics and conduct
CODE OF ETHICS AND CONDUCT
1 Framework versus rulebook approach to ethical guidance
Ethical guidance can either be principles0based (a conceptual framework
approach) or rules based.
Advantages of a ‘rulebook’ approach:
• Certainty.
• Clarity regarding what is not permitted.
However, it is virtually impossible for rulebased systems to be able to deal
with every situation that may arise, particularly across various national
boundaries and in a dynamic industry.
They can also be interpreted narrowly in order to circumvent the underlying
‘spirit’ or intention of the rule.
CODE OF ETHICS AND
CONDUCT
Advantages of an ‘conceptual framework’ approach
A conceptual framework approach has advantages over rule-based
systems.
• A framework is more appropriate to changing circumstances in a
dynamic profession.
• Principles may be applied across national boundaries, where laws
may not.
• The onus is placed on the auditor to demonstrate that all
matters are considered within the principles of the framework.
• A framework approach may include some specific ‘prohibitions’ or d
eal with specific matters.
CODE OF ETHICS AND
CONDUCT
IFAC Code of Ethics for Professional
Accountants, which applies to all professional accountants
, whether in public practice or not and serves as the
foundation of codes of ethics
developed and enforced by member bodies of IFAC.
FUNDAMENTAL PRINCIPLES
Professional
Competence
and due care
Professional
Confidentiality
Behavior
Fundamental
principles
Objectivity Integrity
FUNDAMENTAL PRINCIPLES
Integrity: Members should be straightforward and honest in a
ll professional and business relationships
Objectivity: Members should not allow bias, conflicts of inter
est or
undue influence of others to override professional or busines
s judgments
Professional Competence and due care:
Members should act diligently
and in accordance with applicable technical and profession
al standards when providing professional services.
FUNDAMENTAL PRINCIPLES
Confidentiality: Confidential
information acquired as a result of professional and b
usiness
relationships should not be used for the personal adv
antage of members or third parties.
Professional Behavior:
Members should comply with relevant
laws and regulations and should avoid any action that
discredits the profession.
THREATS, CONFLICTS AND
ETHICAL ISSUES
• Whilst there are specific threats to objectivity don't forge
t that threats exist to
all of the other elements of the code.
• It is also important to remember that threats don't have t
o be actual threats;
public perception can be just as damaging to a professi
onal.
THREATS
ASSESSMENT & SAFEGUARDS
SAFEGUARDS
Safeguards are divided into two categories:
• Safeguards created by the profession, legislation or
regulation:
These include: requirements for entry into the profession,
continuing professional development, corporate governan
ce,
professional standards, and monitoring and disciplinary pr
ocedures.
• Safeguards created by the work environment
Includes, rotation/removal of relevant staff from the
engagement team, independent quality control reviews, u
sing separate teams, etc.
CONFIDENTIALITY
The rule
• Auditors acquiring information in the course of their professional work
• should not disclose such information to third parties without first obtaining
• permission from the client, unless there is a legal right or duty to disclose, or
• it is in the public interest to do so.