Page 19 - P5 Integrated Workbook TUTOR 2017-18
P. 19

Code of ethics and conduct





                           The 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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