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Ethics and acceptance

The Code of Ethics

1.1 Independence

Professional accountants have a responsibility to act in the public interest.

In order to be trusted the assurance provider needs to be independent of their client.

Independence is freedom from situations and relationships where
objectivity would be perceived to be impaired by a reasonable and
informed third party.

1.2 Conceptual framework

There are two main approaches to ethical guidance:

Principles based Rules based

 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
 Encourages the accountant to use interpret requirements narrowly in
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.

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