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Accountants & Ethics

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ACCOUNTANTS & ETHICS for ACCA Personnel as well as for others..!!

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Accountants & Ethics

  1. 1. ACCOUNTANTS & ETHICS
  2. 2. Accountants & Ethics • Key reasons for expectation of ethical behavior of accountants – Ethical issues may be a matter of law and accountants are expected to apply them – The profession requires members to conduct themselves and provide services to the public according to certain standards – The reputation of the profession and standing is protected – An accountant’s ethical behavior serves to protect the public interest
  3. 3. APPROACHES TO ACCOUNTANCY ETHICS • Professionals, collectively share common views and values • Guidance from a governing body (regulatory or professional body) clarifies the matter regarding the expected professional behavior • Such guidance is usually known as ‘code of ethics’ or ‘code of conduct’
  4. 4. CODE OF ETHICS - ACCOUNTANTS • The International Federation of Accountants (IFAC) is an international body representing the world wide major accountancy bodies • Its mission is to help develop the high standards of professional accountants and enhance the quality of services provided
  5. 5. IFAC & ACCA • IFAC code of ethics indicates a minimum level of conduct for all accountants • ACCA, as a member of IFAC, released its own code of conduct, designed to align with IFAC code • The IFAC code is now administered by the International Ethical Standards Board for Accountants (IESBA)
  6. 6. ACCA CODE OF ETHICS & CONDUCT • A member of ACCA is bound by the ACCA’s Code of and Ethics and Conduct • The fundamental principles of ACCA Code are: – Integrity – Objectivity – Professional competence & due care – Confidentiality – Professional behavior
  7. 7. PERSONAL QUALITIES - ACCOUNTANT • In meeting the fundamental principles, certain qualities are expected of the member • A student of ACCA is expected to develop some personal and professional qualities to meet the fundamental principles of the Code of Ethics & Conduct
  8. 8. PERSONAL QUALITIES OF ACCOUNTANTS • Reliability – work should meet professional standards • Responsibility – take ownership of your work • Timeliness – complete work within agreed time frame • Courtesy – conduct with courtesy and consideration towards clients & colleagues • Respect – recognizing the values & rights of others
  9. 9. PROFESSIONAL QUALITIES OF ACCOUNTANTS • Independence – handle work without prejudice or bias and must be seen to be independent • Skepticism – question information given to you, and form your own opinion regarding quality and reliability • Accountability – be accountable for your own judgments and decisions • Social responsibility – have a public duty…audit work, accountancy work, investment decisions may impact the public
  10. 10. CONFLICTS OF INTEREST • ACCA members should be aware that a conflict between members’ and clients’ interests might arise – members compete directly with clients, or – have a joint venture with a company that is in competition with the client • Members and firms should not accept or continue engagements in which there are, or likely to be, significant conflicts of interest between members, firms and clients
  11. 11. • Members should evaluate the threats arising from a conflict of interest • They should apply safeguards like: – Disclosure is the most important safeguard – Using a separate team or signing confidentiality agreements
  12. 12. THREATS TO ACCOUNTATS • Self interest threat • Self review threat • Advocacy threat • Familiarity threat • Intimidation threat
  13. 13. SELF INTEREST THREATS • ACCA code highlights a number of areas in which self-interest threat to independence might arise Financial interest Close business Employment with Partner on Client Family and personal relationships Assurance Client Board relationships Recruitment Gifts and hospitality Lowballing High % of Fee % or contingent fee Overdue fees Loans & guarantees Self Interest Threat
  14. 14. FINANCIAL INTERESTS • Exists where an audit firm has a financial interest in a client’s affairs, ex., – The audit firm owns shares in the client’s firm – An audit firm is a trustee of a trust that holds shares in the client’s firm
  15. 15. THANK YOU

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