| Ethics in professional accountancy are of utmost | | | | employees, investors, the business and financial |
| importance. Now as the business and financial | | | | community etc perceive them as highly |
| world is adopting international accounting and | | | | competent, reliable, objective and neutral people. |
| auditing standards, it is becoming all the more | | | | Professional accountants therefore, must not only |
| necessary to adhere to certain Code of Ethics | | | | be well qualified but also possess a high degree of |
| prescribed by international and national | | | | professional integrity. Because of these high |
| accountancy bodies. Before arguing in favour of | | | | expectations, professionals have adopted codes |
| the topic, let's have a look at some basic | | | | of ethics; also known as codes of professional |
| concepts: | | | | conduct. These ethical codes call for their |
| Profession | | | | members to maintain a level of self-discipline that |
| A profession is an occupation that requires | | | | goes beyond the requirements of laws and |
| extensive training and the study and mastery of | | | | regulations. Each of the major professional |
| specialized knowledge, and usually has a | | | | association for accountants has a code of ethics. |
| professional association, ethical code and process | | | | As mentioned earlier, professional accountants can |
| of certification or licensing; for example | | | | be of two types. One who work in firms or |
| engineering, medicine, social work, teaching, law, | | | | independently run those firms that provide |
| finance, the military, nursing and Accountancy etc. | | | | accounting, auditing and other advisory services to |
| Classically there were only three professions: | | | | clients; these are called public practitioners. Others |
| military, medicine and law. Each of these | | | | are those who are employees of organizations |
| professions holds to a specific code of ethics and | | | | and may serve as internal auditors, management |
| members are almost universally required to swear | | | | accountants, financial managers and financial |
| some form of oath to uphold those ethics, | | | | analysts. Regardless of the role of accountants, |
| therefore 'professing' to a higher standard of | | | | they are adhered to code of ethics which are |
| accountability. Each of these professions also | | | | applied to their professional conduct although there |
| provides and requires extensive training in the | | | | are some special provisions for those in public |
| meaning, value and importance of its particular | | | | practice [Reference: Code of Ethics for |
| oath in practice of that profession. | | | | Professional Accountants-International Federation |
| Accountant | | | | of Accountants (IFAC)]. |
| Practitioner of Accountancy is known as | | | | International Federation of Accountants-IFAC: |
| Accountant. Qualified Accountant, Accountant, | | | | The International Federation of Accountants |
| Professional Accountant or Accountancy | | | | (IFAC) is a federation of all accountancy bodies |
| Practitioner is a legally certified accountancy and | | | | throughout the world. All the major international |
| financial expert. Accountants not only work in | | | | and national associations like ACCA, AICPA, ICMA, |
| public practice but many of them are working | | | | ICAP, IASB etc are all its member organizations. |
| within private corporations, in financial industry and | | | | The mission of IFAC, as set out in its constitution, |
| in various government bodies. Accountancy | | | | is "the worldwide development and enhancement |
| (profession) or accounting (methodology) is the | | | | of an accountancy profession with harmonized |
| measurement, disclosure or provision of | | | | standards, able to provide services of consistently |
| assurance about financial information that helps | | | | high quality in the public interest" [Ref: Code of |
| managers, investors, tax authorities, lenders and | | | | Ethics for Professional Accountants-IFAC]. In |
| other stakeholders and decision makers to make | | | | pursuing this mission, the IFAC Board has |
| resource allocation and policy making decisions. | | | | established the IFAC Ethics Committee to develop |
| Like many other professions there are many | | | | and issue, under its own authority, high quality |
| professional bodies for accountants throughout | | | | ethical standards and other pronouncements for |
| the world. Some of them are legally recognized in | | | | professional accountants for use around the world. |
| their jurisdictions such as British qualified | | | | The Code of Ethics establishes ethical |
| accountants including Chartered Certified | | | | requirements for professional accountants. A |
| Accountant (ACCA or FCCA), Chartered | | | | member body or firm may not apply less |
| Accountant (CA, ACA or FCA), Canadian qualified | | | | stringent standards than those stated in this Code. |
| accountants such as Chartered Accountant and | | | | The objective of setting this code of conduct is |
| Certified General Accountants (CA or CGA) and | | | | to harmonize these standards and practices on a |
| American qualified Accountants such as Certified | | | | global perspective. Public can only trust these |
| Public Accountants (CPA) etc. Some other | | | | highly professionals when it is made mandatory to |
| statutory and non-statutory accountancy | | | | observe and follow strict regulations and codes |
| qualifications are Certified Management | | | | throughout the world. A professional accountant is |
| Accountant (CMA), Associated Cost and | | | | required to comply with the following fundamental |
| Management Accountant (ACMA), Certified | | | | principles mentioned in this Code of Ethics:[Ref: |
| Financial Analyst (CFA) and Certified Fraud | | | | Section 100.4 Code of Ethics for Professional |
| Examiner (CFE) etc. | | | | Accountants] |
| In Pakistan, the Institute of Chartered | | | | · Integrity: A professional accountant |
| Accountants of Pakistan is the sole professional | | | | should be honest and straightforward in all |
| and accountancy body with the right to award | | | | professional and business relationship. |
| the Chartered Accountant designation. ICAP is the | | | | · Objectivity: A professional accountant |
| member of IFAC (International Federation of | | | | should not allow bias, conflict of interest or undue |
| Accountants, IASB (International Accounting | | | | influence of others to override professional or |
| Standards Board), Confederation of Asian & | | | | business judgments. |
| Pacific Accountants (CAPA) and South Asian | | | | · Professional Competence & Due |
| Federation of Accountants (SAFA). The members | | | | Care: A professional accountant has a continuing |
| of ICAP have reached to 4,089 as of March 1, | | | | duty to maintain professional knowledge and skills |
| 2007 data. | | | | at the level required to ensure that a client or |
| Role of Professional Accountants: | | | | employer receives competent professional |
| Accountants are independent business advisors. | | | | service. A professional accountant should act |
| Accountants can offer an extensive range of | | | | diligently and in accordance with applicable technical |
| services. Accountants can be registered auditors, | | | | and professional standards when providing |
| can set up client's accounting systems, can be an | | | | professional services. |
| advisor on tax planning, or a detector of frauds | | | | · Confidentiality: A professional accountant |
| and embezzlements, can do budgeting and financial | | | | should respect the confidentiality of information |
| statement analysis, advise clients on financing | | | | acquired as a result of professional and business |
| decisions, provide specialist knowledge and can | | | | relationships and should not disclose nay such |
| help maintaining an ethical environment. | | | | information to third parties without proper and |
| After discussing the basic concepts and role of | | | | specific authority unless there is a legal or |
| professional accountants we are in a better | | | | professional right or duty to disclose. This |
| position to ponder on what professional ethics is | | | | information should not be used for personal |
| and why it is important in the field of | | | | advantage by professional accountant. |
| accountancy. | | | | · Professional Behaviour: A professional |
| Definition of Ethics | | | | accountant should comply with relevant laws and |
| The word 'Ethics' is derived from the Ancient | | | | regulations and should avoid any action that |
| Greek word ethikos; means customs and habits. | | | | discredits the profession. |
| A major branch of philosophy which is the study | | | | Code of Ethics defined in 'Members Handbook' for |
| of values and customs of a person or group and | | | | members of ICAP Pakistan is in conformity with: |
| covers the analysis and employment of concepts | | | | · IFAC Code of Ethics and International |
| such as right and wrong, good and evil and do's | | | | Auditing Standards |
| and don'ts. | | | | · International Accounting Standards |
| Code of Ethics: | | | | · The Institute of Chartered Accountants |
| In the context of a code adopted by a profession | | | | of Pakistan - ICAP |
| or by a governmental organization to regulate | | | | · Relevant legislation |
| that profession, an ethical code may be styled as | | | | [Ref: Members Handbook-ICAP] |
| a code of professional responsibility, which may | | | | This Code of Ethics has discussed in detail the role |
| dispense with difficult issues of what behaviour is | | | | of Chartered Accountants in given situations. For |
| 'ethical'. A code of ethics is often a formal | | | | example there are clear directives on prohibition |
| statement of the organization's values on certain | | | | of acceptance of gifts, long association with |
| ethical and social issues relating to the profession | | | | clients, advertising of firm's name exceeding |
| and practice of the professional knowledge. This | | | | prescribed limits, holding client's monies for no |
| also includes the principles and procedures for | | | | sound reason, disclosure of client's records |
| specific ethical situations. | | | | (except ones that are allowed), acceptance of |
| Ethics in Professional Accountancy: | | | | fees offered by client which is less than that |
| The general ethical standards of society apply to | | | | prevailing in market etc. |
| people in professions such as medicine, law, | | | | After discussing in detail the importance of ethics |
| nursing and accountancy etc just as much as to | | | | in accounting profession, we are to conclude the |
| anyone else. However society places even higher | | | | topic with this final note that accountancy as a |
| expectations on professionals. People need to | | | | profession is acceptable and relied upon only when |
| have confidence in the quality of the complex | | | | ability to exercise professional judgment based on |
| services provided by professionals | | | | a foundation of ethics; broad but deep technical |
| Ethics in accountancy profession are invaluable to | | | | excellence and strategic awareness are exercised |
| accounting professionals and to those who rely on | | | | by a professional accountant. Only then general |
| their services. Stakeholders including clients, credit | | | | public can trust the integrity of this profession. |
| grantors, governments, taxation authorities, | | | | |