Recent events in a number of major jurisdictions involving professional accountants have raised concerns with many stakeholders and the public about whether the accountants’ conduct was straightforward and honest, free from conflicts of interest, in accordance with confidentiality requirements, or in the public interest. A number of these events have resulted in government inquiries, significant regulatory penalties or other adverse consequences for the professional accountants or their firms, and undermined public trust in the accountancy profession.
Among all professions, the global accountancy profession stands apart in having a comprehensive and robust code of ethics in the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) that it must apply. The Code is developed in accordance with a rigorous due process and under the oversight of the Public Interest Oversight Board (PIOB). The strength and global acceptance of the Code are evidenced by its adoption or use in over 130 jurisdictions, and adoption by the 34 largest international networks of accounting firms for transnational audits.
“Ethics is fundamental to public trust in the work of all professional accountants and it must always be at the heart of their judgments, decisions, and actions when performing professional activities or services,” said Gabriela Figueiredo Dias, IESBA Chair. “The high-quality ethics standards in the Code are a cornerstone to ethical behavior in business and organizations, and they underpin the accountancy profession’s longstanding good reputation. It is therefore crucial that all accountants fully understand and comply with all their ethical obligations under the Code.”
Professional accountants must act in all business and professional dealings or relationships in accordance with the five fundamental principles of the Code:
- Integrity by being straightforward and honest;
- Objectivity by not being compromised by bias, conflict of interest, or undue influence of, or undue reliance on, individuals, organizations, technology or other factors;
- Professional competence and due care by maintaining professional knowledge and skill at the level necessary to competently perform their work, and acting diligently;
- Confidentiality by respecting the confidentiality of information acquired as a result of professional and business relationships; and
- Professional behavior by complying with relevant laws and regulations, behaving in a manner consistent with the profession’s responsibility to act in the public interest, and avoiding any conduct that might discredit the profession.
The fundamental principles clearly establish the standard of behavior expected of all professional accountants. The Code also contains detailed provisions specifying the conduct and mindset expected of all professional accountants, including demonstrating an inquiring mind and having the strength of character to act appropriately, even when facing pressure or potential adverse personal or organizational consequences.
Importantly, the Code sets a clear expectation for professional accountants, especially those in leadership or managerial roles, to promote an ethical culture within their organizations.
Upholding the fundamental principles and complying with the specific requirements of the Code enable professional accountants to meet their responsibility to act in the public interest. These obligations are in no way lightened or diminished by the types of activities or services they undertake. The Code applies to professional accountants in all their professional activities, whether it is audit, tax, consulting or other advisory services, or in business. Non-compliance with ethical requirements not only creates a risk of adverse consequences for accountants from a professional or regulatory standpoint, but also may result in profound negative consequences for firms, employing organizations, clients, other stakeholders, and the public at large. Ethical failures can also damage the profession’s reputation.
Ethics is central to the proper functioning of organizations, financial markets, and economies worldwide. The fundamental principles are the foundation to ethical behavior within organizations and underpin the integrity and credibility of financial and non-financial information. An organizational culture that integrates an ethical approach strengthens public trust in professional accountants’ work, safeguards the well-being and sustainability of organizations, and ultimately serves to protect the public interest.
