1 Overview and General Application Code of Ethics for
Professional Accountants Gopal C Ghosh FCA, FCMA, FIPA The
Institute of Chartered Accountants of Bangladesh (ICAB) Slide 2 2
The Code Code of Ethics for Professional Accountants applies to all
professional accountants, whether in public practice, in business,
education, or the public sector. The IESBA Code serves as the
foundation for codes of ethics developed and enforced by members of
the International Federation of Accountants (IFAC). A member body
of IFAC or firm shall not apply less stringent standards than those
stated in this Code. However, if a member body or firm is
prohibited from complying with certain parts of this Code by law or
regulation, they shall comply with all other parts of this Code.
Slide 3 3 IESBA The International Ethics Standards Board for
Accountants (IESBA) is an independent standard- setting board that
develops and issues, in the public interest, high-quality ethical
standards and other pronouncements for professional accountants
worldwide. IESBA develops the Code of Ethics for Professional
Accountants, which establishes ethical requirements for
professional accountants. Slide 4 4 IESBA Board The IESBA consists
of 18 board members from around the world, of whom no more than 9
are practitioners and no fewer than 3 are public members
(individuals who are expected to reflect, and are seen to reflect,
the wider public interest). Members are appointed by the IFAC
Board, based on recommendations from the IFAC Nominating Committee
and with the approval of the Public Interest Oversight Board
(PIOB), which oversees the activities of the IESBA. Slide 5 5 PIOB
The Public Interest Oversight Board (PIOB) oversees the public
interest activities of IFAC. The objective of the PIOB is to
increase confidence of investors and others that such activities,
including the setting of standards by the IESBA, are properly
responsive to the public interest. PIOB members are nominated by
international institutions and regulatory bodies. Slide 6 6 Parts
of Code This Code contains three parts: Part-A General Application
of the Code Part-B Professional Accountants in Public Practice
Part-C Professional Accountants in Business Slide 7 7 Parts of Code
Part A establishes the fundamental principles of professional
ethics and provides a conceptual framework for professional
accountants. Parts B and C describe how the conceptual framework
applies in certain situations. They provide examples of safeguards
that may be appropriate to address threats to compliance with the
fundamental principles. Part B applies to professional accountants
in public practice. Part C applies to professional accountants in
business. Slide 8 8 Part-A General Application of the Code Part A
establishes the fundamental principles of professional ethics for
professional accountants and provides a conceptual framework that
professional accountants shall apply to: (a) Identify threats to
compliance with the fundamental principles; (b) Evaluate the
significance of the threats identified; and (c) Apply safeguards,
when necessary, to eliminate the threats or reduce them to an
acceptable level. A professional accountant shall use professional
judgment in applying this conceptual framework. Slide 9 9
Fundamental Principles Integrity To be straight forward and honest
in all professional and business relationships Objectivity To not
allow bias, conflict of interest or undue influence of others to
override professional or business judgments Slide 10 10 Fundamental
Principles Professional Competence and Due Care To maintain
professional knowledge and skill at the level required to ensure
competent professional services based on current developments in
practice, legislation and techniques To act diligently in
accordance with applicable technical and professional standards
Slide 11 11 Fundamental Principles Confidentiality To refrain from
disclosing confidential information acquired as a result of
professional and business relationships without proper and specific
authority to disclose unless there is a legal or professional right
or duty to disclose To refrain from using confidential information
acquired as a result of professional and business relationships for
personal advantage or the advantage of third parties Slide 12 12
Fundamental Principles Professional behavior Obligation to comply
with relevant laws and regulations and avoid any action that
discredits the profession Slide 13 13 Conceptual Framework Approach
This Code establishes a conceptual framework that requires a
professional accountant to identify, evaluate, and address threats
to compliance with the fundamental principles. Conceptual framework
approach accommodates many variations in circumstances that create
threats to compliance with the fundamental principles and can deter
a professional accountant from concluding that a situation is
permitted if it is not specifically prohibited. Slide 14 14
Conceptual Framework Approach Professional accountant shall
exercise professional judgment, and identify threats to compliance
with the fundamental principles determine that they are not at an
acceptable level, determine whether appropriate safeguards are
available Available safeguards can be applied to eliminate the
threats or reduce them to an acceptable level. Slide 15 15
Conceptual Framework Approach A professional accountant may
encounter situations in which threats cannot be eliminated or
reduced to an acceptable level. In such situations, the
professional accountant shall decline or discontinue the specific
professional activity or service involved or, resign from the
engagement (in the case of a professional accountant in public
practice) or the employing organization (in the case of a
professional accountant in business). Slide 16 16 Conceptual
Framework Approach Unusual circumstances When a professional
accountant encounters unusual circumstances in which the
application of a specific requirement of the Code would result in a
disproportionate outcome or an outcome that may not be in the
public interest, it is recommended that the professional accountant
consult with a member body or the relevant regulator. Slide 17 17
Threats Self-interest Self-review Advocacy Familiarity Intimidation
Threats fall into one or more of the following categories: Slide 18
18 Threats Self-interest threat the threat that a financial or
other interest will inappropriately influence the professional
accountants judgment or behavior; Self-review threat the threat
that a professional accountant will not appropriately evaluate the
results of a previous judgment made, or activity or service
performed by the professional accountant, on which the accountant
will rely when forming a judgment. Slide 19 19 Threats Advocacy
threat the threat that a professional accountant will promote a
clients or employers position to the point that the professional
accountants objectivity is compromised; Familiarity threat the
threat that due to a long or close relationship with a client or
employer, a professional accountant will be too sympathetic to
their interests or too accepting of their work; and Slide 20 20
Threats Intimidation threat the threat that a professional
accountant will be deterred from acting objectively because of
actual or perceived pressures, including attempts to exercise undue
influence. Slide 21 21 Safeguards Safeguards are measures that may
eliminate threats or reduce them to an acceptable level. They fall
into two broad categories: (a) Safeguards created by the
profession, legislation or regulation; and (b) Safeguards in the
work environment. Slide 22 22 Safeguards Safeguards created by the
profession, legislation or regulation include: Educational,
training and experience requirements for entry into the profession.
Continuing professional development requirements. Corporate
governance regulations. Professional standards. Professional or
regulatory monitoring and disciplinary procedures. External review
by a legally empowered third party. Slide 23 23 Safeguards Certain
safeguards may increase the likelihood of identifying or deterring
unethical behavior. Such safeguards, which may be created by the
accounting profession, legislation, regulation, or an employing
organization, include: Effective, well-publicized complaint systems
operated by the employing organization, the profession or a
regulator, which enable colleagues, employers and members of the
public to draw attention to unprofessional or unethical behavior.
An explicitly stated duty to report breaches of ethical
requirements. Slide 24 24 Conflicts of Interest A conflict of
interest creates a threat to objectivity and may create threats to
the other fundamental principles. Such threats may be created when:
The professional accountant undertakes a professional activity
related to a particular matter for two or more parties whose
interests with respect to that matter are in conflict; or The
interests of the professional accountant with respect to a
particular matter and the interests of a party for whom the
professional accountant undertakes a professional activity related
to that matter are in conflict. Slide 25 25 Conflicts of Interest -
Resolution Process When initiating conflict resolution process, the
following factors may be relevant to the resolution process: (a)
Relevant facts; (b) Ethical issues involved; (c) Fundamental
principles related to the matter in question; (d) Established
internal procedures; and (e) Alternative courses of action.
Considering the relevant factors, a professional accountant shall
determine the appropriate course of action. Slide 26 26 Conflicts
of Interest - Resolution Process If the matter remains unresolved,
the professional accountant may: a.consult with other appropriate
persons within the firm or employing organization for help in
obtaining resolution. b.consult with those charged with governance
of the organization, such as the board of directors or the audit
committee. c.obtaining professional advice from the relevant
professional body or from legal advisors. d.withdraw from the
engagement team or specific assignment, or to resign altogether
from the engagement, the firm or the employing organization. Slide
27 27 Conflicts of Interest - Resolution Process Obtaining
professional advice --- Confidentiality ? Can obtain guidance on
ethical issues without breaching the fundamental principle of
confidentiality if the matter is discussed a.with the relevant
professional body on an anonymous basis or b.with a legal advisor
under the protection of legal privilege. The professional
accountant may consider obtaining legal advice in that instance to
determine whether there is a requirement to report. Slide 28 28
Learning Fundamental Principles Code of Ethics 1.Integrity
2.Objectivity 3.Professional Competence and Due Care
4.Confidentiality 5.Professional Behavior Threats & Safeguards
Code of Ethics 1. Self-interest 2. Self-review 3. Advocacy 4.
Familiarity 5. Intimidation Conflict of Interest & Resolutions
Slide 29 29 Questions Slide 30 30 Thank You
http://www.eruditeape.com/mcq-quizzes/ias-10-
events-after-the-reporting-period-quiz/
