The International Code of Ethics for Professional Accountants

The Code 

The International Code of Ethics for Professional Accountants spells global ethics and independence standards that guide professional accountants. The code fosters professional behaviour, integrity, objectivity, professional competence, due care and confidentiality among professional accountants globally. In execution of duties such as auditing, accountants have to be ethical by abiding to code of professional conduct. Application of ethics in accountancy prevents potential abuse of financial information including manipulation of financial statements to erroneously improve a company’s performance ( Allen, 2018) . A chattered professional accountant has to show competency evidenced by having necessary academic knowledge and experience in accounting. The code requires accountants to observe confidentiality when handling an organization’s financial information without disclosure to unauthorized parties. Stipulations from the code gives accountants authority and duty to report breach of ethical rules in cases of violation of the code’ s principles. 

Being Independent 

Performing audit services requires exercising of independence by professional accountants. Independence as an ethical concept requires professional accountants to exhibit objectiveness and refrain from developing ties or relationships with clients. When conducting services, accountants ought not to engage in questionable business relationships and conflict of interest. Failure to exercise independence may hamper provision of an honest opinion regarding an organization’s financial information ( Allen, 2018) . Application of the conceptual framework aids in identification, evaluation and assessment of threats to professional independence. An accountant who keeps close and personal relationships with a company’s management would not be trusted to give a fair representation of a company’s financial standing. The relationship would make an auditor vulnerable to compromise and collusion to issue a favorable audit report hence amounting to violation of international code of ethics. Audit independence risk significantly affects the quality and credibility of audit. 

Enhancing Clarity 

Restructuring the code has facilitated operationalization of ethical precepts by professional bodies and regulators such as the International Federation of Accountants (IFAC) and Chartered Institute of Management Accountants (CIMA). Improvements of the code has made the text easier to read and understand by professional accountants. Revising the code has facilitated elimination of ambiguous areas thus improving its usability. Restructuring has enhanced the code’s transparency and usefulness. Streamlining the code stands to achieve higher standards of ethical behaviour among professional accounts. Additional restructuring t argets reduction of material duplication to improve the flow and enhance visibility of requirements. As Allen (2018) explains, the updates will lead to increased compliance of fundamental principles including integrity, strengthened independence and confidentiality of accountant’ s professional conduct . 

Professional Skepticism 

Professional skepticism as provided by the code applies in contexts of auditing financial statements. An auditor has to have a questioning mind and exhibit alertness in incidences of possible misstatements, error and fraud as a form critical assessment of audit evidence. As Pamukcu and Ero ğ lu (2018) explain , skepticism allows professional due care i n planning audit services thus enabling auditors to perform diligently, with integrity, and in good faith in gathering and having an objective evaluation of evidence. Failure to exercise professional skepticism paves way for improprieties consequently leading to scandals such as the ones that affected Mitsubishi, Wels Fargo and Volkswagen as auditors failed to raise questions. 

Conclusion 

The principle of integrity requires professional accountants to be honest and truthful by disassociating themselves from reports or returns containing materially false statements. Accountants apply objectivity in when auditing financial statements that require a true and fair view of a company’s standing. In preparation of an organization’s statements of financial position, statement of income, cash flow and statement of equity, an accountant ought to apply professional competence and due care. An accountant has to possess skills required to make balance sheet computations and necessary reconciliations. Clients thus receive professional services following application of competence. Confidentiality finds its application in handling an organization’s sensitive financial information. Thus, accountants should not disclose any unpublished information about a client’ s affairs . 

References 

Allen, C. R. (2018). A New Take on Ethics and Independence: A Refreshed International Code Emphasizes 3 Key Objectives for Professional Accountants.  Journal of Accountancy ,    226 (6), 44. 

Pamukcu, A., & Ero ğlu, N. Z. (2018). Ethics in the Auditing Company. In  Regulations and Applications of Ethics in Business Practice   (pp. 97-113). Springer, Singapore.