Ethically speaking – International Code of Conduct – Global Principles for Professional Accountants

A new Code of Ethics has been released by the International Ethics Standards Board for Accountants.  It is reorganized to be easier to apply in practice.

Andrew Mintzer, CPA

The Code of Ethics(Code) is designed to present rich guidance about how accountants should deal with, and consider, ethics and independence issues.

Although the fundamental principles of ethics remain the same in the new code, the unifying conceptual framework has been revised. Accountants should use this framework to identify, evaluate, and address threats to compliance with the fundamental principles.

What does the new Code cover?

The Code has guidance for all professional accountants as well as specific additional guidance for both professional accountants in public practice, as well as professional accountants in business.

person taking photo of grey concrete building
Photo by Brett Sayles on

The new code contains:

  • Revised “safeguards” provisions designed to be better aligned to threats to compliance with the fundamental principles.
  • Independence provisions regarding long association of personnel with audit clients.
  • New and revised sections dedicated to professional accountants in business relating to preparing and presenting information, and relating to pressure to breach the fundamental principles.
  • Guidance for professional accountants in business.
  • Guidance to emphasizing the importance of understanding facts and circumstances when exercising professional judgment.
  • New guidance to explain how compliance with the fundamental principles supports the exercise of professional skepticism in an audit or other assurance engagements.

Professional Accountants in Business

The IESBA Code Part 2 has specific requirements for “professional accountants in business”.  As explained, this Part of the Code sets out requirements and application material for professional accountants in business when applying the conceptual framework. The conceptual framework does not describe every possible circumstance, including professional activities, interests and relationships, that could be encountered by professional accountants in business, which create or might create threats to compliance with the fundamental principles, the Code, thereforerequires professional accountants in business to be alert for such facts and circumstances.

Investors, creditors, employing organizations and other segments of business, as well as governments and the public, might rely on the work of professional accountants in business. Professional accountants in business might be solely or jointly responsible for the preparation and reporting of financial and other information, on which both others might rely. They might also be responsible for providing effective financial management and competent advice on a variety of business-related matters. The Code, therefore, sets out requirements for professional accountants in business in several key areas where they might encounter pressure to breach the fundamental principles.

One such pressure area faced by professional accountants in business is to breach the fundamental principles of ethical conduct.

Accountants in business should not let the pressures they face breach their compliance with the Code.

A professional accountant shall not:

  1. Allow pressure from others to result in a breach of compliance with the fundamental principles; or
  2. Place pressure on others that the accountant knows, or has reason to believe, would result in the other individuals breaching the fundamental principles.

Pressure might be explicit or implicit and might come from:

  • Within the employing organization, for example, from a colleague or superior.
  • An external individual or organization such as a vendor, customer or lender.
  • Internal or external targets and expectations.

Examples of pressure that might result in threats to compliance with the fundamental principles include:

  • Pressure related to conflicts of interest, such as pressure from a family member bidding to act as a vendor to the professional accountant’s employing organization to select the family member over another prospective vendor.
  • Pressure to influence preparation or presentation of information such aspressure to report misleading financial results to meet investor, analyst or lender expectations…or to please superiors.
  • Pressure to act without sufficient expertise or due care such aspressure from superiors to perform a task without sufficient skills or training or within unrealistic deadlines.

Boss to professional accountant – just do it!

  • Pressure related to inducements:

oPressure from others, either internal or external to the employing organization, to offer inducements to influence inappropriately the judgment or decision making process of an individual or organization.

oPressure from colleagues to accept a bribe or other inducement, for example to accept inappropriate gifts or entertainment from potential vendors in a bidding process.

  • Pressure related to non-compliance with laws and regulations, such as pressure to structure a transaction to evade or postpone tax.

I will cover other section of the Code of Ethicsin future articles.



Andrew M. Mintzer, CPAis a forensic accounting with the Los Angeles office of Hemming Morse, LLP.  He is a past chair of the California Society of Certified Public Accountants.


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