You’re therefore expected to accept and support your profession’s public interest obligations.

Professional ethics for accountants comes from The International Ethics Standards Board for Accountants (IESBA), one of the Standards Setting Boards within the International Federation of Accountants (IFAC).

  • International Ethics Standards Board for Accountants (IESBA)

    In April 2018, IESBA published a completely rewritten Code of Ethics for Professional Accountants that is easier to navigate, use and enforce. Renamed the International Code of Ethics for Professional Accountants (including International Independence Standards), the new Code became effective in June 2019.

    The IESBA Code has a new structure and is clearer about how accountants should deal with ethics and independence issues. While the fundamental principles of ethics have not changed, there are major revisions to the unifying conceptual framework - the approach used by all professional accountants to identify, evaluate and address threats to compliance with the fundamental principles and, where applicable, independence.

    The IESBA Code is arranged in five parts:

    • Part 1 - Complying with the Code, Fundamental Principles and Conceptual Framework
    • Part 2 - Professional accountants in business
    • Part 3 - Professional accountants in public practice
    • Parts 4A and 4B – International Independence Standards
    • Glossary

    As accountants, most of us aspire to high ethical standards, and accept the Social Contract theory, where there’s agreement within a group of people to abide by the rules in order to stay within that group. One of the criticisms of the Social Contract theory is that everyone in the group must agree with the rules. With this in mind, the IESBA Code emphasises principles rather than narrow rules. These fundamental principles are set out in broad terms, ensuring that the vast majority of member bodies (and their millions of members worldwide) can endorse them.

    As an IFAC member body, we’re required to adopt an ethical code no less stringent than the IESBA Code. Our own Code of Ethics and Conduct is based on the IESBA Code, and the fundamental principles that we set out are the same. As well as adopting the IESBA Code in its entirety, we also add text specific to our members and students.

  • Financial Reporting Council (FRC)

    The Ethical Standards issued by the FRC relate only to auditing and reporting in the UK and Republic of Ireland, while the ACCA Rulebook applies to all ACCA members, students and firms. The FRC Ethical Standards recognise the specific nature of an audit engagement, with the emphasis on the integrity, objectivity and independence of the auditor.

    The FRC has undertaken a major revision of its Ethical Standards, building on existing changes made to standards in 2016. In December 2019 the FRC published its Revised Ethical Standard 2019 which applies in the audit of financial statements and other public interest assurance engagements in both the private and public sectors. The Revised Ethical Standard 2019 became effective on 15 March 2020, except for paragraph 5.42 which applied to periods commencing on or after 15 December 2020.

    The latest revisions are intended to strengthen auditor independence, prevent conflicts of interest and promote audit quality. The Revised Ethical Standard 2019 has been simplified and made clearer to use. It incorporates changes to international ethical requirements, which now prohibit auditors from providing recruitment and remuneration services or playing any part in management decision making. Public interest entity auditors are now only be able to provide non-audit services which are closely linked to the audit itself or required by law or regulation. This dramatically reduces the risk of a damaging conflict of interest, where the commercial interests of an auditor are perceived to be the most important factor in an audit relationship, rather than a focus on high quality audit.

    The FRC’s approach is similar to our own (and IESBA's) Conceptual Framework approach for resolving ethical challenges. The Revised Ethical Standard 2019 continues by requiring auditors to identify and assess threats to the overarching principles of integrity, objectivity and independence. Procedures (safeguards) must be applied in order to either eliminate the threat or reduce it to an acceptable level. 

    The FRC categorises the various threats as follows:

    • Self-interest;
    • Self-review;
    • Management;
    • Advocacy;
    • Familiarity (or trust); and
    • Intimidation.

    These are not inconsistent with ACCA's (and IESBA's) framework of threats and safeguards.

    Consideration of whether the ethical outcomes required by the overarching principles and supporting ethical provisions have been met should be evaluated by reference to the perspective of an objective, reasonable and informed third party.

  • Irish Auditing and Accounting Supervisory Authority (IAASA)

    IAASA adopts auditing standards for use in Ireland under licence from the FRC in the UK. In December 2020, IAASA published a new Ethical Standard for Auditors (Ireland) 2020, based on the FRC’s Revised Ethical Standard 2019. Where necessary, the standard has been amended or augmented to address specific Irish legal and regulatory requirements. The new ethical standard is effective for audits of financial statements for periods beginning on or after 15 July 2021, with early adoption permitted.