(Last Updated On: May 28, 2017)
A professional accountant shall follow with the following fundamental principles during their job;
Integrity is to be honest and straight forward in all professional and business matters.
Objectivity is not to be bias someone cannot influence the professional and business judgments made by you.
Professional Competence and due care;
Professional competence is to maintain a professional knowledge and skill at a level which is required to satisfy the client or employer needs.
The information acquired as a result of professional and business relationship, will not be disclosed to third parties without proper authorization.
Professional Behavior is to comply with all relevant laws and regulation and avoid discredits to profession.
These five are fundamental principles of ACCA’s ethical code. How these principles applied during the practical work, examples are provided below;
In the scenario Bolts Ltd has been asked his auditor to prepare a report for the acquisition of steel Pty Ltd. The discussion with CFO can threat the fundamental principles, in this discussion there are threats to integrity, Objectivity and Professional behavior. The CFO asked the Auditor to just focus the sales and profitability. Don’t bother the directors with cash flow statement issues. In this the fundamental principle integrity and objectivity is at threaten. Because to save the integrity principle I have to be honest and straightforward with my work, if I follow the director instruction I will not be honest with my work. Because the cash flow statement of the company is not correct.
My objectivity is also affected by this, because I have to be not bias and nobody can influence my work or decision, but in the scenario the director is deciding that what I have to do, or not to do. There is self-interest threat to the objectivity too because I don’t want to lose the client, this client is going to offer me this type of work in future too. There is familiarity threat will also present because the client is working with us for many years. Intimidation threat by the CFO because if I have not done according to what he needs then they can change their auditor.
Professional Behavior will also be affected because I am not doing the work according to all the relevant laws and regulation because my work is affected by the director decision. A director cannot decide the work of the auditor. I have to follow all the procedure which are required to prepare the report for Board to directors of Bolts Ltd for the acquisition of Steel Pty Ltd. I have to provide the accurate information in the report so they can take the right decision for the acquiring or not acquiring the company.