14: Codes of professional ethics

Question 1

What are sources of ethical guidance?

Answer 1

ICAEW code - for members of ICAEW
IESBA code - International federation of accoutants, influences ICAEW code
FRC ethical standards - UK standards

Question 2

What are the advantages of a framework of principles over a system of ethical rules?

Answer 2

ABC-FI

Active consideration and demonstration of conclusions - look at everything not just a checlist of forbidden rules

Broad interpretation of ethical situations -rules encourage deception whereas principles encourage compliance.

Individual situations covered - allows for variation in situations, as each one is likely to be different

Flexible to changing situation - principles accomodate a rapidly changing environment compared to old rules

Can incorporate prohibitions - forbidding something e.g. auditor cannot be employed by client etc like a rule

Question 3

What are ICAEW Fundamental principles

Answer 3

PIPCO

Professional behaviour
Integrity
Pro competence
Confidentiality
Objectivity

Question 4

What are the two categories of safeguard?

Answer 4

Safeguard created by profession, legislation or regulation. E.g. ICAEW

Safeguard in work environment

Question 5

Give 4 safeguards by profession

Answer 5

• Educational training (studies)
• Continual professional development
• Professional standards
• Corporate governance regulations

Question 6

Give 4 safeguards by workplace

Answer 6

• Partner review on work done
• Consulting independent third party
• Declaration of independence
• Rotating senior personnel

Question 7

Do accountants need to adhere to fundamental principles when doing volunteering work?

Answer 7

Yes, must comply ‘with or without reward’ to prevent the profession being discredited.

Question 8

What are FRC ethical standards (UK)

Answer 8

Part A: Fundamental concepts (same as principles) e.g. integrity etc

B: 6 sections regarding legal requirements