Accounting Business Reporting for Decision Making

70 Accounting: Business Reporting for Decision Making

2.6 Professional codes of ethics and ethical

decision-making methods

LEARNING OBJECTIVE 2.6 Explain the use of codes of ethical conduct and apply ethical
decision-making methods to business situations.

Many companies and professional bodies have developed their own codes of ethics. The two major

accounting professional bodies have a joint code of ethics known as APES 110 Code of Ethics for

Professional Accountants. This code is issued by the Accounting Professional and Ethical Standards Board

(APESB), established by CPA Australia and Chartered Accountants Australia and New Zealand (CAANZ)

as an independent body that issues the code of ethics and the standards that members are required to abide

by. Complying with the code is mandatory for all members of the two accounting professional bodies, and

disciplinary action can take place if members do not comply. The code describes minimum acceptable stan-

dards of professional conduct and focuses on fundamental principles, but is not to be taken as a definitive

statement on all matters. Members are encouraged to be guided by the spirit of the code. The code is divided

into three main parts: A. the fundamental principles; B. issues relevant to members in an accounting public

practice; and C. issues relevant to members in business. The overriding application of the code emphasises

that ‘a distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the

public interest’. This means that accounting professionals need to safeguard the interests of their clients and

employers and accept their responsibility to the public at large. The five fundamental principles espoused in

the code to guide a member’s decision making are summarised below.

Integrity

•   Be straightforward, honest and sincere in your approach to professional work.

Objectivity

•   Do not compromise your professional or business judgement because of bias, conflict of interest or

the undue influence of others.

Professional competence and due care

•   Perform professional services with due care, competence and diligence. Carry out your professional

work in accordance with the technical and professional standards relevant to that work.

•   Maintain professional knowledge and skill at a level required.

•   Refrain from performing any services that you are not competent to carry out unless assistance is obtained.

Confidentiality

•   Respect the confidentiality of information acquired in the course of your work and do not disclose

any such information to a third party without specific authority or unless there is a legal or

professional duty to disclose it.

•   Refrain from using confidential information acquired as a result of the professional engagement to

your advantage or the advantage of third parties.

Professional behaviour

•   Conduct yourself in a manner consistent with the good reputation of the profession and refrain from

any conduct that might bring discredit to the profession.

DECISION-MAKING EXAMPLE

Applying the code of conduct

SITUATION You are currently the auditor for the Learning and Care Childcare Centre. It values your

audit each year and your suggestions for improving its internal control and accounting systems. It has

approached you to undertake some consultancy services for its information system upgrade. Do you

take on the engagement?