5. Principles of Professional Ethics Flashcards
What are ethics?
-the professional ethics of an organisation are the moral principles or standards that govern the conduct of the members of that organisation
What is the code of professional ethics?
-designed to help members maintain the high standard of professionalism that is expected of them
What is the AAT code based off?
-the international ethics standards board for accountants
(IESBA)
What does the AAT code state?
-sets out expected standard
-helps protect public interest
-helps maintain AAT’s good reputation
Who does the AAT code apply?
-applies to all fellow, full, affiliate and student members of AAT
How is the AAT code separated?
- Part A applies to all members
- Part B represents additional guidance which applies specifically to members in practice
- Part C applies specifically to members in business
What are the 5 fundamental principles of professional ethics?
- professional behaviour
- professional competence
- confidentiality
- integrity
- objectivity
What is integrity?
-the quality of being honest and having strong moral principles that you refuse to compromise
What are the 3 key ethical values that contribute to integrity?
- honesty
- transparency
- fairness
What is objectivity?
-someone who bases their opinion and decisions on real facts and is not influenced by personal beliefs or feelings
What is independence?
-freedom from control or influence of others
What is professional competence and due care?
-ensures that a client or employer receives competent professional service based on current developments in practice
What is professional competence?
-having a duty to keep themselves up to date with developments in the accounting profession
-expected to do this by completing CPD
What is due care?
-when carrying out an assignment an accountant must always take the appropriate amount of care to ensure that the quality of the work meets high standards
What is the ‘duty of confidentiality’?
-they have an obligation to respect the confidentiality of info about a client’s affair which has been gained during their employment or during the course of their professional work
-extends to the period after the relationship has ended
When is it acceptable to disclose confidential information?
-when authorised by the client or employer
-when disclosure is required by law
-when there is a professional duty to disclose
When is the disclosure of confidential information required by law?
-when the info is required as evidence in the court of law
-when the law has been broken and the info has to be disclosed to the relevant authorities
What may you be required to provide when summoned to the court as a witness?
-provide documents which will be used as evidence
-appear in court in person to give evidence
When might be another time when you have to disclose information?
-when a client or employer has broken the law
-eg. money laundering
What is money laundering?
-to move illegally acquired cash through financial systems so that it appears to be legally acquired
What are the main 4 circumstances when you have a professional duty to disclose information?
- to comply with the quality review of an IFAC (international federation of accountants)
- to respond to an inquiry by a regulatory accounting body or disciplinary nature
- to protect the professional interests of the accountant in legal proceedings
- to comply with technical and ethical standards
What 3 points must you consider before disclosing information?
- whether you know all the facts, and if there is sufficient evidence
- decide who is the right person to disclose info to, and by how
- if you could face any legal consequences
What should you follow when faced with conflict between ethical principles and data protection?
-follow code of ethics
Examples of internal disciplinary procedures by an employer
-verbal warning
-written warning
-disciplinary hearing
-opportunity to appeal
-suspension
-dismissal
Who takes disciplinary action by professional bodies?
-the FRC
financial reporting council
What are the 2 types of misconduct?
-bringing the profession into disrepute
-acting in breach of regulations
What are some types of penalties?
-written undertaking to refrain
-fine
-reprimanded
-ineligible for a practicing licence
-suspended membership
-expelled from the body
What are the 3 classes of fraud?
- by false representation
- failing to disclose information
- abuse of position
What is bribery?
-giving or receiving something of value with the intention of influencing the recipient to do something favourable to the giver of the bribe
What are the 4 key bribery act offences?
- bribing another
- receiving
- bribing a foreign official
- failing to prevent bribery
What do professional bodies base their ethical codes on?
-the IESBA
-international ethics standard board for accountants
-part of the IFAC
