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Professional ethics
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Accountants are trusted with important information. Professional ethics are the principles they must follow.
The fundamental principles
Integrity: being straightforward and honest.
Objectivity: not allowing bias, conflicts of interest or pressure from others to affect judgement.
Professional competence and due care: keeping knowledge and skills up to date and working carefully.
Confidentiality: not disclosing information without proper authority, and not using it for personal gain.
Professional behaviour: obeying laws and avoiding actions that discredit the profession.
Objectivity: not allowing bias, conflicts of interest or pressure from others to affect judgement.
Professional competence and due care: keeping knowledge and skills up to date and working carefully.
Confidentiality: not disclosing information without proper authority, and not using it for personal gain.
Professional behaviour: obeying laws and avoiding actions that discredit the profession.
Applying the principles
An accountant asked by a manager to hide a loss must refuse: this breaks integrity.
An accountant who is related to a client's owner may lack objectivity.
Telling a friend about a client's profits breaks confidentiality.
An accountant who is related to a client's owner may lack objectivity.
Telling a friend about a client's profits breaks confidentiality.
The public interest
Accountants act in the public interest, not just for their employer or client.
Many people (investors, lenders, employees, government) rely on financial statements being true and fair. Dishonest accounts can harm all of them.
Many people (investors, lenders, employees, government) rely on financial statements being true and fair. Dishonest accounts can harm all of them.
An accountant is offered a gift by a client to make the profit look higher. Which principles are threatened?
- Changing figures dishonestly breaks integrity.
- The gift could bias judgement.
Answer: Integrity and objectivity
The five principles: integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Accountants must act in the public interest because many people rely on accounts.
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