Code-of-Ethics-Part-C for Professional Accountants

PROFESSIONAL
ACCOUNTANTS
IN
BUSINESS
Auditing in a CIS
Environment

SECTION
300
• Professional accountants in business has a role as
trusted individuals who provide accurate financial
information and competent financial management.
• The legal form of the relationship with the employing
organisation, if any, has no bearing on the ethical
responsibilities incumbent on the professional
accountant in business*.
IIlustration of how the conceptual framework contained in Code of Ethics
Part A
is to be applied by professional accountants in business.

SECTION
300
• While a professional accountant in business must support
their employing organization's legitimate goals, they
must also adhere to fundamental ethical principles.
• Professional accountants in business, especially those in
senior positions, have a greater influence on
organizational practices and culture.
• Professional accountants should not knowingly engage
in any business, occupation, or activity that impair
integrity, objectivity, or good reputation of the
profession.

SECTION
300
• Compliance with fundamental principles may potentially
be threatened by broad range of circumstances.
Many threats fall into the following categories:
a. Self-interest
·Financial interests, loans or guarantees.
·Incentive compensation arrangements.
·Inappropriate personal use of corporate assets.
·Concern over employment security.
·Commercial pressure from outside the employing
organization.

SECTION
300
b. Self-review
·Determining the appropriate accounting treatment for a business
combination after performing the feasibility study that
supported the acquisition decision.
c. Advocacy
·Professional accountants in business can support and promote
their organization's goals and objectives as long as they do so
truthfully and without misleading anyone.

SECTION
300
c. Familiarity
·Being responsible for the employing organization’s financial
reporting when an immediate or close family member employed by
the entity makes decisions that affect the entity’s financial reporting.
·Long association with business contacts influencing business
decisions.
·Acceptance of a gift or preferential treatment, unless that value
is clearly insignificant.

SECTION
300
d. Intimidation
·Threat of dismissal or replacement of the professional
accountant in business or a close or immediate family member over
a disagreement about the application of an accounting principle or
the way in which financial information is to be reported.
·A dominant personality attempting to influence the decision-
making process.

SECTION
300
Safeguards that may eliminate or reduce to an acceptable level the
threats faced by professional accountants in business fall into two
broad categories:
(a) Safeguards created by the profession, legislation or
regulation;
(b) Safeguards in the work environment.
Examples of safeguards created by the profession, legislation or
regulation are detailed in paragraph 100.12 of Part A of this Code.

SECTION
300
Safeguards in the work environment include, but are not
restricted to:
• The employing organization’s systems of corporate oversight or
other oversight structures.
• The employing organization’s ethics and conduct programs.
• Recruitment procedures in the employing organization
emphasizing the importance of employing high caliber competent
staff.
• Strong internal controls.
• Appropriate disciplinary processes.
• Leadership that stresses the importance of ethical behavior and

SECTION
300
Safeguards in the work environment include, but are not
restricted to:
• Policies and procedures to implement and monitor the quality
of employee performance.
• Timely communication of the employing organization’s policies
and procedures
• Policies and procedures to empower and encourage employees
to communicate to senior levels within the employing
organization any ethical issues that concern them without fear of
retribution.
• Consultation with another appropriate professional accountant.

SECTION
300
In circumstances where a professional accountant in business
believes that unethical behavior or actions by others will continue to
occur within the employing organization:
· They should consider seeking legal advice.
· If all possible safeguards have been used but the issue persists,
and the threat remains too high, resignation may be the best
option.

SECTION310
CONFLICTOF
INTEREST

A professional accountant in business may face conflicts of interest
when performing professional activities. These conflicts can
threaten objectivity and other fundamental principles.
Such threats may arise when:
• The accountant engages in a professional activity related to a
particular matter where two or more parties have conflicting
interests.
• The accountant’s personal interests or those of a related party
conflict with the interests of another party involved in the
professional activity.
SECTION
310

Examples of situations in which conflicts of interest may arise
include:
·Serving in a management or governance position for two
employers and obtaining confidential information that could benefit
or harm one organization over the other.
·Assisting in the dissolution of a partnership while working
professionally for both partners.
·Preparing financial information for certain members of
management of the entity employing the professional accountant
who are seeking to undertake a management buy-out.
SECTION
310

Examples of situations in which conflicts of interest may arise
include:
·Selecting a vendor for the employing organization when an
immediate family member of the accountant has financial interests
in that vendor.
·An accountant in a leadership role approves company investments
that could personally benefit their own or a family member’s
investment portfolio.
SECTION
310

• When identifying and evaluating the interests and
relationships that might create a conflict of interest and
implementing safeguards, a professional accountant in business
shall exercise professional judgment
• When addressing a conflict of interest, a professional
accountant in business is encouraged to seek guidance from
within the employing organization or from others, such as a
professional body, legal counsel or another professional
accountant.
• If the threat created by a conflict of interest is not at an
acceptable level, the professional accountant in business shall
apply safeguards to eliminate the threat or reduce it to an
SECTION
310

• In identifying whether a conflict of interest exists or may be
created,
a professional accountant in business shall take reasonable steps to
determine:
·The nature of the relevant interests and relationships
between the parties involved; and
·The nature of the activity and its implication for relevant
parties.
• If a conflict of interest is identified, the professional
accountant in business shall evaluate:
·The significance of the relevant interests or relationships;
and
SECTION
310

• The professional accountant in business shall apply safeguards.
Depending on the circumstances giving rise to the conflict of
interest, application of one or more of the following safeguards may
be appropriate:
· Restructuring or segregating certain responsibilities and duties.
· Obtaining appropriate oversight.
· Withdrawing from the decision-making process related to the
matter giving rise to the conflict of interest.
· Consulting with third parties.
SECTION
310

• A professional accountant should disclose conflicts of interest
to relevant parties within the organization. If safeguards are
needed, they must obtain consent before proceeding.
• When disclosure is verbal, or consent is verbal or implied, the
professional accountant in business is encouraged to document
the nature of the circumstances giving rise to the conflict of
interest, the safeguards applied to reduce the threats to an
acceptable level and the consent obtained.
• A professional accountant in business may encounter other
threats to compliance with the fundamental principles.
SECTION
310

SECTION320
PREPARATIONANDREPORTING
OFINFORMATION

• Professional accountants in business are often involved in the
preparation and reporting of information that may either be
made public or used by others inside or outside the
employing organization. Such information may include financial
or management information.
• A professional accountant in business shall prepare or present
such information fairly, honestly and in accordance with
relevant professional standards.
• A professional accountant in business who has responsibility
for the preparation or approval of the general purpose financial
SECTION
320

• A professional accountant in business shall take reasonable
steps to maintain information
1. Describes clearly the true nature of business transactions, assets, or
liabilities;
2. Classifies and records information in a timely and proper manner,
and
3. Represents the facts accurately and completely in all material
respects
• Threats to compliance with the fundamental principles, for
example, self-interest or intimidation threats to objectivity or
professional competence and due care, are created where a
professional accountant in business is pressured (either externally or
SECTION
320

• The significance of such threats will depend on factors such as the
source of the pressure and the degree to which the information is, or
may be, misleading. The significance of the threats shall be
evaluated and safeguards applied when necessary to eliminate then
or reduce them to an acceptable level.
• A professional accountant in business may have been unknowingly
associated with misleading information. Upon becoming aware of
this, the professional accountant in business shall take steps to be
disassociated from that information. In determining whether there is
a requirement to report, the professional accountant in business
may consider obtaining legal advice.
SECTION
320

SECTION330
ACTINGWITHSUFFICIENT
EXPERTISE

• The fundamental principle of professional competence and
due care.
• Professional accountant in business has, or can obtain,
sufficient specific training or experience. A professional
accountant in business shall not intentionally mislead an
employer as to the level of expertise or experience possessed,
nor shall a professional accountant in business fail to seek
appropriate expert advice and assistance when required.
• Circumstances that create a threat to a professional
accountant in business performing duties with the appropriate
degree of professional competence and due care include having:
SECTION
330

• Insufficient time for properly performing or completing the
relevant duties.
• Incomplete, restricted or otherwise inadequate
information for performing the duties properly.
• Insufficient experience, training and/or education.
• Inadequate resources for the proper performance of the
duties.
SECTION
330

• The significance of the threat will depend on factors such as the
extent to which the professional accountant in business is working
with others, relative seniority in the business, and the level of
supervision and review applied to the work.
• Examples of such safeguards include:
• Obtaining additional advice or training.
• Ensuring that there is adequate time available for performing the
relevant duties.
• Obtaining assistance from someone with the necessary expertise.
• Consulting, where appropriate, with:
1.Superiors within the employing organization:
2. Independent experts, or
3. A relevant professional body.
SECTION
330

• When threats cannot be eliminated or reduced to an
acceptable level. professional accountants in business
shall determine whether to refuse to perform the duties
in question.
• The professional accountant in business determines
that refusal is appropriate, the reasons for doing so shall
be clearly communicated.
SECTION
330

SECTION340
FINANCIALINTERESTS,COMPENSATIONAND
INCENTIVESLINKEDTOFINANCIAL
REPORTING& DECISIONMAKING

340.1
• Professional accountants in business may have financial interests, or may know of
financial interest of immediate or close family members.
*Self -interest threats to objectivity and confidenciality through the existence
of the motive and opportunity to manipulate price sensitive information in order to
gain financially.
• Self- interest threat arising from compensation or incentive arrangements may be
further compounded by pressure from superior or peers in the employing
organization who participate in the same arrangements.
• Maintain the principle of integrity.
• Necessary safeguard should be applied, to eliminate the threat or reduce it to an
acceptable level.
340.2
3
340.4
340.3

A professional accountant in business should assess the risk
associated with all such offers and consider whether the following
actions should be taken:
a. Where such offers have been made, immediately inform
higher levels of management or those charged with governance of
the employing organization;
b. Inform third parties of the offer
c. Advise immediate or close family members of relevant
threats and safeguards where they are potentially in positions that
might result in offers of inducements
d. Inform higher levels of management or those charged with
governance of the employing organization where immediate or
SECTION
350

• A professional accountant in business may face situations where
they are expected or pressured to offer inducements to
manipulate someone else's judgment, influence a business
decision, or obtain confidential information.
• This pressure can come from inside the organization or from
external parties. These pressures could lead the accountant to
act unethically in favor of the organization's interests.
• Where the pressure to offer an unethical inducement comes from
within the employing organization, the professional accountant
should follow the principles and guidance regarding ethical
conflict resolution set out in Part A of this Code.
SECTION
350

RULESONADVERTISINGANDPROMOTI
FORTHEPRACTICEOFACCOUNTANCY
INTHEPHILIPPINES

RULESONADVERTISINGANDPROMOTIONFOR
THEPRACTICEOFACCOUNTANCYINTHE
PHILIPPINES
• The Professional Regulation Commission – Board of Accountancy
(PRC-BOA) issued Resolution No. 126, Series of 2008, to establish
guidelines regarding the advertising and promotion of accountancy
services in the Philippines.
• Traditionally, advertising in the accountancy profession was
restricted due to several concerns, including:
·Undue Competition
·Commercialization of the Profession
·Cost Burden on Clients
·Disadvantage to Small Firms

PHILIPPINES
Rationale Behind the Prohibition: To lend dignity to the profession.
Recent Changes and Revisions: With the expansion of services offered
by accountants and the revisions in the Code of Ethics, the BOA has
allowed advertising to the extent that this provides the public with
necessary information about the sole practitioners or professional
partnerships and the services they offer to their clients.
Implementation of New Advertising Rules: To protect public interest,
the BOA established specific rules and regulations defining the
extent and manner in which advertising and promotion are considered
ethical.

PHILIPPINES
1. Generally, advertising and publicity in any medium are
acceptable provided:
a. It has as its objective the notification to the public or such sectors of
the public as are concerned, of matters of fact.
b. It is in good taste;
c. It is professionally dignified; and
d. It avoids frequent repetition of, and any undue prominence being
given to the name of the firm or professional accountant in public
practice.

PHILIPPINES
The following however shall not be prohibited
a. Self-laudatory statements
b. Discrediting, disparaging, or attacking other firms or CPA
practitioners
c. Referring to, using or citing actual or purported testimonials by third
parties
d. Publishing and comparing fees with other CPAs or CPA firms or
comparing those services with those provided by another firm or CPA
practitioner
e. Giving too much emphasis on competitive differences
f. Using words or phrases which are hard to define and even more
difficult to substantiate objectively

PHILIPPINES
International Affiliations: Firms may only state they are a
"member/correspondent firm" of a foreign entity. Implying the foreign
firm practices in the Philippines is prohibited.
Client Confidentiality: Client names or details of their business cannot
be used in marketing materials without their explicit written consent.
Accreditation Claims: Using terms like "Accredited" is prohibited if the
accreditation (e.g., BOA, SEC, BSP, IC) has expired. * Internal Review: All
advertisements require prior written approval from the Risk
Management Partner and Managing Partner (or equivalent).

PHILIPPINES
Here are some examples of acceptable publicity, along with
considerations for each, keeping in mind the previously mentioned
overarching rules.
Awards:
It is in the interests of the public and the accountancy profession that
any appointment or other activity of a professional accountant in a
matter of national or local importance, or the award of any distinction to
a professional accountant
Professional Accountants Seeking Employment or Professional
Business:

PHILIPPINES
Directories:
A professional accountant may be listed in a directory. Entries may
include name, address, telephone number, professional description,
services offered and any other information.
Books, Articles, Interviews, Lectures, Radio and Television
Appearance:
Professional accountants who author books or articles on professional
subjects, may state their name and professional qualifications and give
the name of their organization but shall not give any information as to
the services that firm provides.

PHILIPPINES
Training Courses, Seminars, etc.
A professional accountant may invite clients, staff or other professional
accountants to attend training courses or seminars conducted for the
assistance of staff. Other persons should not be invited to attend such
training courses or seminars except in response to an unsolicited
requestA professional accountant may invite clients, staff or other
professional accountants to attend training courses or seminars
conducted for the assistance of staff. Other persons should not be
invited to attend such training courses or seminars except in response to
an unsolicited request.

PHILIPPINES
Booklets and Documents Containing Technical Information Booklets
and other documents:
A professional accountant and giving technical information for the
assistance of staff or clients may be issued to such persons, other
professional accountants or other interested parties.
Staff Recruitment
Genuine vacancies for staff may be communicated to the public through
any medium in which comparable staff vacancies normally appear. The
fact that a job specification necessarily gives some detail as to one or
more of the services provided to clients.

PHILIPPINES
Publicity on Behalf of Clients:
A professional accountant in public practice may publicize on behalf of
clients, primarily for staff. However, the professional accountant in public
practice should ensure that the emphasis in the publicity is directed
towards the objectives to be achieved for the client.
Brochures and Firm Directories:
A professional accountant in public practice may issue to clients or, in
response to an unsolicited request, to a non-client:
a. A factual and objectively worded of the services provided; and
b. A directory setting out names of partners, office addresses and
names and address of associated firms and correspondents.

PHILIPPINES
Stationery and Nameplates Stationery:
Professional accountants in public practice should be of an acceptable
professional standard and comply with the requirements of the law and
of the member body concerned as to names of partners, principals and
others who participate in the practice, use of professional descriptions
and designatory letters, cities or countries where the practice is
represented, logotypes, etc.
Announcements:
Appropriate newspapers or magazines may be used to inform the public
of the establishment of a new practice, of changes in the composition of
a partnership of professional accountants in public practice, or of any
alteration in the address of a practice

PHILIPPINES
Inclusion of the Name of the Professional Accountant in Public
Practice in a Document Issued by a Client:
Professional accountant in public practice should take steps to ensure
that the context in which the report is published is not such as might
result in the public being misled as to the nature and meaning of the
report.
The professional accountant in public practice should ensure that this
information is not used in such a way as might lead the public to believe
that there is a connection with organization in an independent
professional capacity.

PHILIPPINES
Anniversaries:
A professional accountant's press and other media releases or announcements
or newspaper supplements, or other similar publications, or other
commemorative media, or the holding of media covered events undertaken
only to commemorate their anniversaries in public practice by informing the
public of their achievements or accomplishments
Websites:
A professional accountant may develop and maintain a website in the Internet
in such suitable length and style which may also include announcements, press
releases, publications and such other necessary and factual information like
firm's name. partners/principals' name and brief description of their
educational attainment, brief listing of services, postal address, telephone, fax

THANK
YOU
AND
Code of Ethics-Part
C

Code-of-Ethics-Part-C for Professional Accountants

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