The role and mindset expected of professional accountants

Professional accountants work in a wide variety of roles and industries and have a responsibility to act in the public interest. Developments in society, technology as well as increasing demands being placed on companies, and their need to demonstrate exceptional performances in challenging economic times, can put additional pressures on their roles and their professional mindset.

The need for professional scepticism

ISA 200 Overall Objective of the Independent Auditor, and the Conduct of an Audit in Accordance with International Standards on Auditing defines professional scepticism as ‘an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence.’ In recent years there have been a number of calls for the professional accountancy Standard-setting Boards to review the way in which their existing guidance addresses ‘professional scepticism’ with a view to strengthening the concept and requiring all professional accountants to exercise it, rather than solely audit and assurance practitioners.

Professional scepticism is an important mindset for the professional auditor to adopt when planning and reviewing assurance engagements. IESBA revised key areas of the International Code of Ethics for Professional Accountants (the Code) which promote the role and mindset expected of professional accountants. These include the following:

  • Highlighting the wide-ranging role in society of professional accountants and the relationship which exists between compliance with the Code and a professional accountant’s responsibility to act in the public interest.

  • Changes to the definitions of the fundamental principles of objectivity and professional behaviour.

  • The addition of new application material in respect of the fundamental principle of integrity to include a determination to act appropriately.

  • Strengthening the Code through requiring professional accountants to have an inquiring mind when applying the conceptual framework and exercising professional judgement.

  • Emphasising the importance of being aware of the dangers of bias when carrying out professional work and of professional firms having a positive, internal organisational culture.

Role and responsibility

Compliance with the Code enables professional accountants to meet their responsibilities to act in the public interest. In its explanatory memorandum, however, the IESBA concedes that compliance with the Code, in itself, does not necessarily mean that professional accountants discharge this responsibility in full. Professional accountants are involved in a wide range of roles and acknowledge that organisations involve professional accountants in these activities because they recognise the skills and values that they bring to these activities.

Objectivity and professional behaviour

The Code states that the definition of "objectivity" requires the exercise of professional judgement, without being compromised by factors such as bias, conflicts of interest or any form of undue influence by, or undue reliance on other parties.

The Code considers the potential impact of technological developments such as artificial intelligence and big data on the ethical behaviour of professional accountants. As a result of these concerns, the definition of ‘objectivity’ highlights the risks of technology impairing a professional accountant’s objectivity. In this respect it is also significant that the IESBA has included ‘automation bias’ in the list of examples of bias under Section 120 of the Code .

These references to technology in the Fundamental Principles and Conceptual Framework are aimed at recognising the changes in assurance technologies and their potential impact on compliance with the principle of objectivity within the Code.

The Code defines the fundamental principle of "professional behaviour" by  requiring that professional accountants must behave in a manner that is consistent with the profession’s responsibility to act in the public interest. This reinforces the relationship between compliance with the five fundamental principles and a professional accountant’s responsibility to act in the public interest.


The Code states that demonstrating integrity includes having the determination to act appropriately when confronted with dilemmas or difficult situations, providing the following examples of what this might involve:

  • standing one’s ground when facing pressure to do otherwise during the course of performing professional activities, or
  • challenging others when appropriate, even when doing so creates potential adverse personal or organisational consequences.

The inclusion of the concept of ‘determination to act appropriately in difficult situations’ and its position within the principle of integrity emphasises the need to do the right thing regardless of the challenges faced by a professional accountant. At a time when the accountancy profession is under enormous pressure and scrutiny, it seems the focus of the change is to ensure that the Code convey that it is one thing for an accountant to know something is wrong, but actually having the courage to speak up will be vital to compliance.

Application of the conceptual framework: having an enquiring mind

Professional accountants should have a mindset that encapsulates the following characteristics:

  • The ability to obtain and understand information relevant for making reliable judgements based in facts and circumstances which are known to the professional accountant.
  • The capability to make informed challenges of the views developed by others.
  • Sensitivity to the integrity of information, including the source of the information and the appropriateness of its presentation, and
  • Be able to withhold judgement until careful consideration can be given to all known and relevant available information.

The Code is aimed at promoting the need for professional accountants to be inquisitive and curious about the information available. They should also conduct the necessary assessment or investigation of the integrity, relevance and sufficiency of that information to reach an informed decision. The application material within the Code defines ‘having an inquiring mind’ as:

i. being open and alert for situations and information (or the lack thereof) that might require further investigation; and

ii. considering whether there is a need to critically evaluate the information obtained where the need for, extent and nature of, any investigation, including critical evaluation, will depend on the nature, scope and outputs of the professional activity being undertaken.

This requires all professional accountants to consider or remain alert to whether facts and circumstances have changed and, therefore, obliges them to exercise an inquiring mind in the judgements they reach. The exercise of scepticism is a vital quality for all professional accountants.

Application of the conceptual framework: bias

It is important to heighten awareness of the risks arising from bias. This includes making professional accountants’ aware of individual bias which may affect their application of professional judgement. In addition to this, the Code includes an illustrative list of other common forms of bias. These include:

  • Anchoring bias: a tendency to use an initial piece of information as an anchor against which subsequent information is adequately assessed.

  • Automation bias: a tendency to favour output generated from automated systems, even when human reasoning or contradictory information raises questions as to whether such output is reliable or fit for purpose.

  • Availability bias: a tendency to place more weight on events or experiences that immediately come to mind or are readily available than on those that are not.

  • Confirmation bias: a tendency to place more weight on information that corroborates an existing belief than information that contradicts or casts doubt on that belief.

  • Groupthink: a tendency to think or make decisions as a group that discourages creativity or individual responsibility.

  • Overconfidence bias: a tendency to overestimate one’s own ability to make accurate assessments of risk and other judgements or decisions.

  • Representation bias: a tendency to base an understanding on a pattern of experiences, events or beliefs that is considered to be representative.

  • Selective perception: a tendency for a person’s expectations to influence how the person views a particular matter or person.

By raising awareness in relation to potential forms of bias, the professional accountant can reduce the risk and impact of its effect, particularly on the ability to exercise professional judgement. They will be able to identify and mitigate for the subsequent threats created, such as through consulting others or seeking advice from experts, additional input or appropriate challenge therefore enhancing the evaluation process.

Application of the conceptual framework: importance of organisational culture

The Code emphasise the importance of a positive internal organisational culture to the effective application of the conceptual framework by providing application material. In particular, it explains that ethical culture is most effective when:

(a) Leaders and those in managerial roles hold themselves and others accountable for demonstrating the ethical values of the organisation

(b) Appropriate education and training programs, management processes, and performance evaluation criteria that promote that ethical culture are in place: and

(c) Ethical values are adhered to in dealings with third parties.

It is also worth highlighting that the Code works closely alongside the International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, which sets out requirements and application material in the relation to the firm’s responsibility to design and implement an effective system of quality management.


The Code highlights to professional accountants the significance of their role in society and the importance of compliance towards fulfilling their responsibility to act in the public interest.

Written by a member of the AAA examination team