Ethics and the Professional Accountant Flashcards
(15 cards)
What is ethics in the context of accountancy?
Moral principles that govern behaviour and guide the correctness of actions
Why does ethics matter in financial reporting?
It ensures public trust, protects professional reputation, supports personal integrity, and ensures legal compliance
Who are ‘the public’ in ‘public interest’?
Investors, consumers, taxpayers, citizens — essentially anyone impacted by financial information
What is meant by the ‘public interest’?
Net benefits to society from actions or decisions, ensuring transparency, fairness, and economic certainty.
Name 3 responsibilities of the accountancy profession in the public interest
1.Apply high standards of ethical behaviour
2.Promote high-quality reporting standards
- Engage in dialogue with regulators and stakeholders
What is the purpose of the IFAC Code of Ethics?
To guide professional accountants in identifying, evaluating, and addressing ethical threats.
What are the 5 fundamental principles in the IFAC Code of Ethics?
1.Integrity
2.Objectivity
3.Professional competence and due care
4.Confidentiality
5. Professional behaviour
What is the conceptual framework approach?
1.Identify threats
2.Evaluate significance
3.Apply safeguards
List the 5 types of ethical threats in the IFAC Code
-Self-interest
-Self-review
-Advocacy
-Familiarity
-Intimidation
Give 2 examples of real-life ethical dilemmas accountants might face
Pressure to manipulate earnings
What does ‘earnings management’ involve?
The use of accounting techniques to present a desired view of financial performance, often aggressively or unethically.
What are common causes of unethical financial reporting?
Market pressure, job threats, tax minimisation, loan covenant compliance, and complex transactions
What should you do if you spot unethical accounting during an internship
-Discuss with management
-Alert internal/external auditors
-Maintain confidentiality
-Consider whistleblowing or resigning if necessary
What is greenwashing in sustainability reporting?
Misleading stakeholders into believing a company is more environmentally responsible than it truly is.
What are some key ESG reporting topics?
Gender pay gap, diversity, emissions, labour conditions, and anti-corruption policies.
