International Code of Ethics for Professional Accountants (including International Independence Standards)

There are five fundamental principles of ethics for professional accountants:

• Integrity - to be straightforward and honest in all professional and business relationships.

• Objectivity - not to compromise professional or business judgments because of bias, conflict of interest or undue influence of others.

• Professional Competence and Due Care - to:

  • Attain and maintain professional knowledge and skill at the level required to ensure that a client or employing organization receives competent professional service, based on current technical and professional standards and relevant legislation; and

  • Act diligently and in accordance with applicable technical and professional standards.

• Confidentiality - to respect the confidentiality of information acquired as a result of professional and business relationships.

• Professional Behavior - to comply with relevant laws and regulations and avoid any conduct that the professional accountant knows or should know might discredit the profession.

The fundamental principles of ethics establish the standard of behavior expected of a professional accountant. The conceptual framework establishes the approach which an accountant is required to apply to assist in complying with those fundamental principles. Subsections 111 to 115 set out requirements and application material related to each of the fundamental principles.

A professional accountant might face a situation in which complying with one fundamental principle conflicts with complying with one or more other fundamental principles. In such a situation, the accountant might consider consulting, on an anonymous basis if necessary, with:

• Others within the firm or employing organization.

• Those charged with governance.

• A professional body.

• A regulatory body.

• Legal counsel.

However, such consultation does not relieve the accountant from the responsibility to exercise professional judgment to resolve the conflict or, if necessary, and unless prohibited by law or regulation, disassociate from the matter creating the conflict.

Integrity implies fair dealing and truthfulness.

If a professional accountant provides a modified report in respect of such a report, return, communication or other information, the accountant is not in breach of paragraph R111.2.

Serving clients and employing organizations with professional competence requires the exercise of sound judgment in applying professional knowledge and skill when undertaking professional activities.

Maintaining professional competence requires a continuing awareness and an understanding of relevant technical, professional and business developments. Continuing professional development enables a professional accountant to develop and maintain the capabilities to perform competently within the professional environment.

Diligence encompasses the responsibility to act in accordance with the requirements of an assignment, carefully, thoroughly and on a timely basis.

Confidentiality serves the public interest because it facilitates the free flow of information from the professional accountant's client or employing organization to the accountant in the knowledge that the information will not be disclosed to a third party. Nevertheless, the following are circumstances where professional accountants are or might be required to disclose confidential information or when such disclosure might be appropriate:

• Disclosure is required by law, for example:

  • Production of documents or other provision of evidence in the course of legal proceedings; or

  • Disclosure to the appropriate public authorities of infringements of the law that come to light;

• Disclosure is permitted by law and is authorized by the client or the employing organization; and

• There is a professional duty or right to disclose, when not prohibited by law:

  • To comply with the quality review of a professional body;

  • To respond to an inquiry or investigation by a professional or regulatory body;

  • To protect the professional interests of a professional accountant in legal proceedings; or

  • To comply with technical and professional standards, including ethics requirements.

In deciding whether to disclose confidential information, factors to consider, depending on the circumstances, include:

• Whether the interests of any parties, including third parties whose interests might be affected, could be harmed if the client or employing organization consents to the disclosure of information by the professional accountant.

• Whether all the relevant information is known and substantiated, to the extent practicable. Factors affecting the decision to disclose include:

  • Unsubstantiated facts.

  • Incomplete information.

  • Unsubstantiated conclusions.

• The proposed type of communication, and to whom it is addressed.

• Whether the parties to whom the communication is addressed are appropriate recipients.

Conduct that might discredit the profession includes conduct that a reasonable and informed third party would be likely to conclude adversely affects the good reputation of the profession.

If a professional accountant is in doubt about whether a form of advertising or marketing is appropriate, the accountant is encouraged to consult with the relevant professional body.