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

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

  • International Ethics Standards Board for Accountants (IESBA)

    The IESBA Code of Ethics for Professional Accountants is arranged in three parts:

    • Part A - General application of the Code
    • Part B - Professional accountants in public practice
    • Part C - Professional accountants in business

    Part A contains the over-arching principles, which should be considered paramount.

    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 independence and objectivity of the auditor. The major provisions of Ethical Standard 1 (ES1) include the following:

    • The firm should establish policies and procedures to ensure that the firm and senior members of the audit team act with integrity, objectivity and independence.
    • These procedures should be monitored in a manner appropriate to the size and nature of the firm.
    • If the firm has more than three partners, one should be designated the ‘ethics partner’, having responsibility for the adequacy of the firm’s policies and procedures, their compliance with the FRC Ethical Standards and relevant communication within the firm.

    The FRC Ethical Standards (last updated when the Auditing Practices Board was still in existence) have been criticised for being over prescriptive. However, ES1 states:

    ‘Whenever a possible or actual breach of an Auditing Practices Board (APB) Ethical Standard, or of policies and procedures established pursuant to the requirements of an APB Ethical Standard, is identified, the audit engagement partner, in the first instance, and the ethics partner, where appropriate, assesses the implications of the breach, determines whether there are safeguards that can be put in place or other actions that can be taken to address any potential adverse consequences and considers whether there is a need to resign from the audit engagement’.

    This approach is similar to our own (and IESBA's) Conceptual Framework approach for resolving ethical challenges. ES1 continues by requiring auditors to identify threats to objectivity and independence, and actively assess their significance. Procedures (safeguards) must be applied in order to reduce any identified threats 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.