CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS

Part A - General Application of the Code

Part B - Professional Accountants in Public Practice

Part C - Professional Accountants in Business

Section 100: Introduction and Fundamental Principle

Part A establishes the fundamental principles of professional ethics for professional accountants and
provides a conceptual framework that professional accountants shall apply to:

(a) Identify threats to compliance with the fundamental principles;

(b) Evaluate the significance of the threats identified; and

(c) Apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable
level.

• A professional accountant shall use professional judgment in applying this conceptual framework

FUNDAMENTAL PRINCIPLES

INTEGRITY

OBJECTIVITY

PROFESSIONAL COMPETENCE AD DUE CARE

CONFIDENTIALITY

PROFESSIONAL BEHAVIOR

(a) Integrity – to be straightforward and honest in all professional and business relationships.
• The principle of integrity imposes an obligation on all professional accountants to be
straightforward and honest in all professional and business relationships. Integrity also implies
fair dealing and truthfulness.
• A professional accountant shall not knowingly be associated with reports, returns,
communications or other information where the professional accountant believes that the
information:
• Contains a materially false or misleading statement;
• Contains statements or information furnished recklessly; or
• Omits or obscures information required to be included where such omission or obscurity
would be misleading.
• When a professional accountant becomes aware that the accountant has been associated with
such information, the accountant shall take steps to be disassociated from that information.
(b)Objectivity – to not allow bias, conflict of interest or undue influence of others to override
professional or business judgments.

• The principle of objectivity imposes an obligation on all professional accountants not to compromise
their professional or business judgment because of bias, conflict of interest or the undue influence of
others.

• A professional accountant may be exposed to situations that may impair objectivity. It is impracticable
to define and prescribe all such situations. A professional accountant shall not perform a professional
service if a circumstance or relationship biases or unduly influences the accountant’s professional
judgment with respect to that service.

• The maintenance of professional competence requires a continuing awareness and an understanding

• Diligence encompasses the responsibility to act in accordance with the requirements of an assignment,
carefully, thoroughly and on a timely basis.

• A professional accountant shall take reasonable steps to ensure that those working under the
professional accountant’s authority in a professional capacity have appropriate training and supervision.
• Where appropriate, a professional accountant shall make clients, employers or other users of the
accountant’s professional services aware of the limitations inherent in the services.

(c)Professional Competence and Due Care – to maintain professional knowledge and skill at the level
required to ensure that a client or employer receives competent professional services.

• The principle of professional competence and due care imposes the following obligations on all
professional accountants:

• To maintain professional knowledge and skill at the level required to ensure that clients or employers
receive competent professional service; and • To act diligently in accordance with applicable technical
and professional standards when providing professional services. • Competent professional service
requires the exercise of sound judgment in applying professional knowledge and skill in the performance
of such service. Professional competence may be divided into two separate phases: • Attainment of
professional competence; and • Maintenance of professional competence.

(d)Confidentiality – to respect the confidentiality of information acquired as a result of professional and

• The principle of confidentiality imposes an obligation on all professional accountants to refrain from:

• Disclosing outside the firm or employing organization confidential information acquired as a result of
professional and business relationships without proper and specific authority or unless there is a legal or
professional right or duty to disclose; and

• Using confidential information acquired as a result of professional and business relationships to their
personal advantage or the advantage of third parties.

• A professional accountant shall maintain confidentiality, including in a social environment, being alert
to the possibility of inadvertent disclosure, particularly to a close business associate or a close or
immediate family member.
• A professional accountant shall maintain confidentiality of information disclosed by a prospective
client or employer.

• A professional accountant shall maintain confidentiality of information within the firm or employing
organization.

• A professional accountant shall take reasonable steps to ensure that staff under the professional
accountant’s control and persons from whom advice and assistance is obtained respect the professional
accountant’s duty of confidentiality.

• The need to comply with the principle of confidentiality continues even after the end of relationships
between a professional accountant and a client or employer. When a professional accountant changes
employment or acquires a new client, the professional accountant is entitled to use prior experience.
The professional accountant shall not, however, use or disclose any confidential information either
acquired or received as a result of a professional or business relationship.

• The following are circumstances where professional accountants are or may be required to disclose
confidential information or when such disclosure may be appropriate:

• Disclosure is permitted by law and is authorized by the client or the employer;

• Disclosure is required by law, for example:

• Production of documents or other provision of evidence during legal proceedings; or

• Disclosure to the appropriate public authorities of infringements of the law that come to light; and

• There is a professional duty or right to disclose, when not prohibited by law:

• To comply with the quality review of a member body or professional body;

• To respond to an inquiry or investigation by a member body or regulatory body;

• To protect the professional interests of a professional accountant in legal proceedings; or

• To comply with technical standards and ethics requirements.

• In deciding whether to disclose confidential information, relevant factors to consider include:

• Whether the interests of all parties, including third parties whose interests may be affected, could be
harmed if the client or employer consents to the disclosure of information by the professional
accountant.

• Whether all the relevant information is known and substantiated, to the extent it is practicable; when
the situation involves unsubstantiated facts, incomplete information or unsubstantiated conclusions,
professional judgment shall be used in determining the type of disclosure to be made, if any.

• The type of communication that is expected and to whom it is addressed.

• Whether the parties to whom the communication is addressed are appropriate recipients.

(e)Professional Behavior – to comply with relevant laws and regulations and avoid any action that
discredits the profession.

• The principle of professional behavior imposes an obligation on all professional accountants to comply
with relevant laws and regulations and avoid any action that the professional accountant knows or
should know may discredit the profession. This includes actions that a reasonable and informed third
party, weighing all the specific facts and circumstances available to the professional accountant at that
time, would be likely to conclude adversely affects the good reputation of the profession.

• In marketing and promoting themselves and their work, professional accountants shall not bring the
profession into disrepute. Professional accountants shall be honest and truthful and not:

• Make exaggerated claims for the services they are able to offer, the qualifications they possess, or
experience they have gained; or

• Make disparaging references or unsubstantiated comparisons to the work of others.

CONCEPTUAL FRAMEWORK APPROACH

THREATS – are created by circumstances and relationships that could compromise an accountant’s
ability to comply with the fundamental principles.

SAFEGUARDS – are actions or other measures that may eliminate threats or reduce them to an
acceptable level.

Threats and Safeguards

• Threats may be created by a broad range of relationships and circumstances.

• When a relationship or circumstance creates a threat, such a threat could compromise, or could be
perceived to compromise, a professional accountant’s compliance with the fundamental principles.

• A circumstance or relationship may create more than one threat, and a threat may affect compliance
with more than one fundamental principle.

Threats

Self-Interest Threat

Self-Review Threat

Advocacy Threat

Familiarity Threat

Intimidation Threat

Self-Interest Threat

• The threat that a financial or other interest will inappropriately influence the professional accountant’s
judgment or behavior;

• The threat that a professional accountant will not appropriately evaluate the results of a previous
judgment made or service performed by the professional accountant, or by another individual within
the professional accountant’s firm or employing organization, on which the accountant will rely when
forming a judgment as part of providing a current service;

Advocacy Threat

• The threat that a professional accountant will promote a client’s or employer’s position to the point
that the professional accountant’s objectivity is compromised;

Familiarity Threat

• The threat that due to a long or close relationship with a client or employer, a professional accountant
will be too sympathetic to their interests or too accepting of their work;

Intimidation Threat

• The threat that a professional accountant will be deterred from acting objectively because of actual or
perceived pressures, including attempts to exercise undue influence over the professional accountant.

Safeguards

• Safeguards are actions or other measures that may eliminate threats or reduce them to an acceptable
level.

- Safeguard created by the profession, legislation, or regulation

Safeguards created by the profession, legislation, or regulation

= Educational, training and experience requirements for entry into the profession.

= Continuing professional development requirements.

= Corporate governance regulations.

= Professional standards.

= Professional or regulatory monitoring and disciplinary procedures.

= External review by a legally empowered third party of the reports, returns, communications or
information produced by a professional accountant.