What is the importance of having a set of professional standards by the accountancy profession?

In June 2005, the IESBA (formerly the Ethics Committee) issued a revised Code of Ethics for Professional Accountants. The revised Code establishes a conceptual framework for all professional accountants to ensure compliance with the five fundamental principles of ethics:

Integrity.

A professional accountant should be straightforward and honest in all professional and business relationships

Objectivity.

Understand the codes of ethics and professional standards that set our expectations of professional conduct and behaviour

APESB has made changes to APES 110 (applicable to all members except members in NZ) to reflect the role and mindset expected of members.

The NZ Regulatory Board has made changes to the NZ Code of Ethics to reflect the role and mindset expected of members.

Members in Australia are expected to observe the Australian Professional and Ethical Standards Board (APES) 110 – Code of Ethics for Accounting Professionals.

Member conduct in New Zealand is similarly governed by the NZICA Codes of Ethics.

These standards are used to assess a member’s professional conduct in the event of a complaint by a client or third party.

A failure to meet the standard may result in disciplinary proceedings. Therefore, there is a significant duty imposed on members to ensure they comply with these standards.

The fundamental principles in both codes are:

• Integrity: Honesty and straightforwardness in professional and business relationships
• Objectivity: Avoid the impact of biases on your judgement, decision making or allow undue influence on others or yourself.
• Professional competence and due care: Maintain professional knowledge and skill at the standard expected by a member of the public when seeking professional advice, or the standard of work and output by an employer. This includes keeping up to date with current trends and technical standards
• Confidentiality: Respect the right of your clients and employer to have personal details and information kept secure, private and confidential.
• Professional behaviour: Compliance with laws and regulations relevant to where you live and do not behave in a way that reflects badly on you, your business or employer and the profession

Both codes mirror the standard expected of an accounting professional in:

Public Practice

• Professional appointments
• Conflict of interest
• Second opinions
• Fees and other remuneration
• Marketing professional services
• Inducements including gifts and hospitality
• Custody of client’s assets
• Responding to non-compliance with laws and regulations

Business

• Conflicts of interest
• Preparation and presentation of information
• Acting with sufficient expertise
• Financial interests, compensation and incentives linked to financial reporting and decision making
• Inducements including gifts and hospitality
• Responding to non-compliance with laws and regulations
• Pressure to breach the fundamental principles

Members in New Zealand undertaking audit and assurance work also need to adhere to the professional and ethical standards issued by the Auditing and Assurance Standards Board including the Code of Ethics for Assurance Practitioners.

Access the standards online

The NZICA Code of Ethics and APES 110 are both available in your Member Handbook.

The NZ Code of Ethics for Assurance Practitioners is available on the External Reporting Board's (XRB) website.

NZ Assurance Code of Ethics

Standard setters for Australia (and other members resident outside NZ)

The Accounting Professional and Ethical Standards Board (APESB) sets the Code of Ethics and professional standards for Chartered Accountants ANZ, CPA Australia and IPA members.

The standards apply wherever members are located, except when prevented from so doing by specific requirements of local laws and/or regulations.

Standard setters for New Zealand

The New Zealand Regulatory Board of the New Zealand Institute of Chartered Accountants (NZICA) sets the professional and ethical standards applicable to members resident in New Zealand.

The American Institute of Certified Public Accountants (AICPA) is a professional organization responsible for developing professional accounting ethical values. The AICPA requires professional accountants to act responsibly when engaging in accounting services and reviewing sensitive financial information. Accountants should always exercise sound moral judgment in all accounting activities.

Accountants have the unique responsibility to provide clients with professional services while presenting a truthful and accurate assessment of a company's financial health to the general public.

Integrity is an important fundamental element of the accounting profession. Integrity requires accountants to be honest, candid and forthright with a client's financial information. Accountants should restrict themselves from personal gain or advantage using confidential information. While errors or differences in opinion regarding the applicability of accounting laws do exist, professional accountants should avoid the intentional opportunity to deceive and manipulate financial information.

Public accounting firms or private companies often develop a code of ethics or conduct for accountants. These ethics and conduct rules ensure all accountants act in a consistent manner. In the absence of specific rules or standards, accountants should review their actions to ensure they are following commonly accepted principles.

Objectivity and independence are important ethical values in the accounting profession. Accountants must remain free from conflicts of interest and other questionable business relationships when conducting accounting services. Failure to remain objective and independent may hamper an accountant's ability to provide an honest opinion about a company's financial information. Objectivity and independence are also important ethical values for auditors.

The accounting industry usually limits the number of services public accounting firms or individual certified public accountants (CPA) can offer clients. Accounting services include general accounting, auditing, tax and management advisory services. Accountants who perform more than one of these services for a client may compromise their objectivity and independence.

For example, individuals who handle general accounting functions and then audit this information are essentially reviewing their own work. This situation may allow an accountant to hide a company's negative financial information.

Due care is the ethical value requiring accountants to observe all technical or ethical accounting standards. Professional accountants are often required to review generally accepted accounting principles (GAAP) and apply this framework to a company's specific financial information. Due care requires accountants to exercise competence, diligence and a proper understanding of financial information.

Competence is usually based on individual's education and experience. Thus, due care may require senior accountants to supervise and direct other accountants with less experience in the accounting profession.

CPA Australia members have a responsibility to act in the public interest. You must comply with the fundamental principles of integrity, objectivity, professional competence, due care, confidentiality and professional behaviour in all your dealings.APESB is an independent body established in 2006 as an initiative of CPA Australia and Chartered Accountants in Australia and New Zealand (CA ANZ). CPA Australia, CA ANZ and the Institute of Public Accountants are all members of the APESB whose role is to develop and issue professional and ethical standards in the public interest that apply to all members and their members.