IFAC published the Handbook of the Code of Ethics for Professional Accountants (Code of Ethics) in 2010. Prepared by the International Ethics Standards Board of Accountants (IESBA), the Code of Ethics became effective on January 1, 2011. It contains three parts. Part A establishes the fundamental principles of professional ethics for professional accountants and provides a conceptual framework that professional accountants shall apply. It states (on page 9): “A professional accountant shall use professional judgment in applying this conceptual framework.”
Parts B and C describe how the conceptual framework applies in certain situations. They provide examples of safeguards that may be appropriate to address threats to compliance with the fundamental principles. They also describe situations where safeguards are not available to address the threats and, consequently, the circumstance or relationship creating the threats shall be avoided. Part B applies to professional accountants in public practice. Part C applies to professional accountants in business. Professional accountants in public practice may also find Part C relevant to their particular circumstances.
According to the Code of Ethics (page 10), the fundamental principles of professional ethics include integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Each of these principles is discussed in detail, for example, objectivity is “to not allow bias, conflict of interest or undue influence of others to override professional or business judgments.” In this case, the Code of Ethics (page 16) states: “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 [emphasis added] with respect to that service.”
