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Ethics in Professional Accountancy

Ethics in professional accountancy are of utmost importance. Now, as the business and financial world is adopting international accounting and auditing standards, it is becoming even more necessary to adhere to certain codes of ethics prescribed by international and national accountancy bodies.

Profession

A profession is an occupation that requires extensive training and the study and mastery of specialized knowledge. It usually has a professional association, ethical code, and process of certification or licensing. Examples include engineering, medicine, social work, teaching, law, finance, the military, nursing, and accountancy.

Accountant

A practitioner of accountancy is known as an accountant. An accountant is a legally certified accountancy and financial expert. Accountants can work in public practice, private corporations, the financial industry, and various government bodies. Accountancy is the measurement, disclosure, or provision of assurance about financial information that helps decision makers make resource allocation and policy-making decisions.

Role of Professional Accountants

Professional accountants are independent business advisors who offer a range of services. They can be registered auditors, set up accounting systems, provide tax planning advice, detect fraud, assist with budgeting and financial statement analysis, advise on financing decisions, provide specialist knowledge, and help maintain an ethical environment.

Definition of Ethics

Ethics is derived from the Ancient Greek word “ethikos,” meaning customs and habits. It is a branch of philosophy that studies values, customs, and concepts such as right and wrong, good and evil, and do’s and don’ts.

Code of Ethics

In the context of a profession or governmental organization, an ethical code is a formal statement of values and principles. It regulates the behavior of professionals and covers ethical and social issues related to their profession and practice.

Ethics in Professional Accountancy

Ethics in the accountancy profession are invaluable to accounting professionals and those who rely on their services. Stakeholders perceive accountants as highly competent, reliable, objective, and neutral individuals. Professional accountants must not only be well-qualified but also possess a high degree of professional integrity. That is why professionals have adopted codes of ethics, also known as codes of professional conduct.

International Federation of Accountants (IFAC)

The IFAC is a federation of all accountancy bodies worldwide. It develops and issues high-quality ethical standards and pronouncements for professional accountants to ensure consistently high-quality services in the public interest. The code of ethics established by the IFAC sets ethical requirements for professional accountants, and member bodies or firms must not apply less stringent standards.

Fundamental Principles of Code of Ethics

The code of ethics for professional accountants includes the following fundamental principles:
– Integrity: Being honest and straightforward in all professional and business relationships.
– Objectivity: Not allowing bias, conflict of interest, or undue influence of others to override professional judgments.
– Professional Competence & Due Care: Continuously maintaining professional knowledge and skills and acting diligently in accordance with applicable standards.
– Confidentiality: Respecting the confidentiality of acquired information and not disclosing it without proper authority.
– Professional Behavior: Complying with relevant laws and regulations and avoiding actions that discredit the profession.

Overall, ethics play a crucial role in the field of professional accountancy, and adherence to ethical codes is necessary for maintaining trust in the profession.
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Ihab Salloum