Page 27 - AAA Integrated Workbook STUDENT S18-J19

Code of ethics and conduct

The Conceptual Framework

There are two main approaches to ethical guidance:

Principles based approach Rules based approach

 Flexible, so can be applied to new,  May be easier to follow because it is
unusual or rapidly changing clearly defined
situations
 Needs frequent updating to ensure
 Principles may be applied across the guidance applies to new
national boundaries where laws situations
may not
 May encourage accountants to
 Requires the accountant to use interpret requirements narrowly in
professional judgment order to get round the spirit of the
requirements.
 Requires compliance with the spirit
of the guidance

 Can still incorporate specific rules
for ethical situations likely to affect
many firms.

A conceptual framework relies on a principles-based approach rather than a rules-
based approach.

The International Federation of Accountants has issued a Code of Ethics which
follows a conceptual framework approach.

23