Corporate and Practitioner Consequences do not
Ethics matter
Accountability
Ethics and Professional
Behavior
Code of Professional Ethics for
- Refers to a system or code of CPAs and The Philippines
conduct based on moral duties
1. July 2009 (I)
and obligations that indicate
how an individual should IESBA issued a revised Code
behave in society. of Ethics
- Refers to the conduct, aims, or
2. January 2011 (E)
qualities that characterize or
mark a profession Effectivity of Revised Code of
Ethics
🧠 Theories of Ethical Behaviour
3. September 2013 (R)
1. Utilitarianism
IESBA revised the definition
Recognizes that decision-
of the term “Those charged
making involves trade-
with governance”
offs between the benefits
and burdens of alternative 4. June 2015 (R & E)
actions
IESBA released an exposure
Focuses on the draft on NOCLAR (Non-
consequences and Compliance with Laws and
individuals affected Regulations)
2. Rights-Based Approach 5. December 2015 (A)
Assumes that individuals BOA approved the Revised
have certain rights Code of Ethics for CPAs in the
Philippines
Others have a duty to respect
those rights when making 6. February 2016 (A)
decisions
IFAC announced the
3. Deontology availability of the 2015 IESBA
Handbook for the Code of
Emphasizes adherence to
Ethics
certain rules or duties
7. July 2016
2016 edition of the Handbook Part 3 Professional
was published by IESBA Accountants in Public Practice
8. June 2019 Sections 300 to 399
2018 edition rewritten for International Independence
easier navigation Standards
Clarified Professional Part 4A: Independence for
Accountants' responsibilities Audit and Review
regarding NOCLAR Engagements (Sections 400
to 899)
Introduced the International
Code of Ethics for Part 4B: Independence for
Professional Accountants, Assurance Engagements
including International Other Than Audit and Review
Independence Standards Engagements (Sections 900
to 999)
The International Code of
Ethics for Professional Glossary
Accountants
Applies to all Professional
(Including International
Accountants
Independence Standards)
1. Professional Accountants
🌐 Overview of the Code
A person who provides
Part 1 Complying with the
professional services
Code, Fundamental Principles,
and Conceptual Framework 2. Professional Services
Applies to all Professional Services requiring
Accountants accountancy or related skill
Sections 100 to 199 3. Professional Accountants in
Business
Part 2 Professional
Accountants in Business Accountants working in
commerce, industry, service,
Sections 200 to 299
public sector, education
Also applies to individual
May be an employee,
professional accountants in
contractor, partner, or
public practice when
director
performing professional
activities pursuant to their
relationship with the firm
Part 1: Complying with the all professional and business
Code, Fundamental Principles and relationships.
Conceptual Framework
2. Objectivity Not to
A distinguishing mark of the compromise professional or
accountancy profession is its business judgments because
acceptance of the responsibility of bias, conflict of interest,
to act in the public interest. or undue influence of others.
A professional accountant shall
3. Professional Competence
comply with the Code
and Due Care Attain and
There might be circumstances
maintain professional
where laws or regulations
knowledge and skill at the
preclude (might not allow)
level required. Act
an accountant from complying
diligently and in
with certain parts of the Code
accordance with applicable
In such circumstances, those
technical and professional
laws and regulations will
standards.
prevail, and the accountant
shall comply with all other parts 4. Confidentiality To respect
of the Code. the confidentiality of
The accountant is encouraged information acquired as a
to consult with a professional result of professional and
or regulatory body business relationships.
A professional accountant who
5. Professional Behavior To
identifies a breach of any other
comply with relevant laws
provision of the Code shall
and regulations and avoid
evaluate the significance of the
any conduct that the
breach and its impact on the
professional accountant
accountant’s ability to comply
knows or should know might
with the fundamental principles.
discredit the profession.
Part 1: Complying with the Code,
Integrity
Fundamental Principles and
Conceptual Framework A professional accountant shall
not knowingly be associated
Fundamental Principles of
with reports, returns,
Professional Conduct for
communications or other
Accountants
information where the accountant
1. Integrity To be believes that the information:
straightforward and honest in
(a) Contains a materially false or accordance with the
misleading statement; requirements of an assignment,
carefully, thoroughly and on a
(b) Contains statements or
timely basis.
information provided recklessly;
- Where appropriate, a
or
professional accountant shall
(c) Omits or obscures required make clients, the employing
information where such omission or organization, or other users of
obscurity would be misleading the accountant’s professional
services or activities, aware of
the limitation inherent in
the services or activities
Objectivity
A professional accountant
shall not undertake a
professional activity if a
circumstance or relationship
unduly influences the
Confidentiality
accountant’s professional
judgment regarding that A professional accountant should:
activity
- Not disclose confidential
Professional Competence and information acquired as a result
Due Care of professional and business
relationships outside the firm or
- Maintaining professional
employing organization without
competence requires a
proper and specific authority,
continuing awareness and
unless there is a legal or
an understanding of relevant
professional duty or right to
technical, professional and
disclose;
business developments.
- Continuing professional - Not use confidential
development enables a information acquired as a result
professional accountant to of professional and business
develop and maintain the relationships for the personal
capabilities to perform advantage of the accountant or
competently within the for the advantage of a third
professional environment party
- Diligence encompasses the
-Disclosure is required by law
responsibility to act in
- Disclosure is permitted by law and Part 1: Complying with the Code,
is authorized by the client or the Fundamental Principles and
employing organization; Conceptual Framework
-There is a professional duty or The conceptual framework
right to disclose, when not specifies an approach for a
prohibited by law professional accountant to:
Professional Behavior (a) Identify threats to
compliance with the
- A professional accountant shall
fundamental principles
not knowingly engage in any
business, occupation or activity (b) Evaluate the threats
that impairs or might impair identified
the integrity, objectivity or
(c) Address the threats by
good reputation of the
eliminating or reducing them
profession, and as a result
to an acceptable level
would be incompatible with the
fundamental principles. When applying the conceptual
- Conduct that might discredit framework, the professional
the profession includes accountant shall:
conduct that a reasonable and
(a) Exercise professional
informed third party would be
judgment
likely to conclude adversely
affects the good reputation of (b) Remain alert for new
the profession information and changes in
facts and circumstances
When undertaking marketing or
promotional activities, a (c) Use the reasonable and
professional accountant shall not informed third party test
bring the profession into disrepute.
Part 1: Exercising
A professional accountant shall be
Professional Judgment
honest and truthful and shall
not make: When exercising professional
judgment, consider whether:
(a) Exaggerated claims for the
services offered by, or the There is reason to be
qualifications or experience of, the concerned that potentially
accountant; or relevant information might
be missing from the facts
(b) Disparaging references or
and circumstances known to
unsubstantiated comparisons to
the accountant
the work of others
There is an inconsistency Part 1: Identifying Threats
between the known facts and
Self-Interest The threat that
circumstances and the
a financial or other interest
accountant’s expectations
will inappropriately
The accountant’s expertise influence a professional
and experience are accountant's judgment or
sufficient to reach a behavior.
conclusion
Self-Review The threat that
There is a need to consult a professional accountant will
with others with relevant not appropriately evaluate
expertise or experience the results of a previous
judgment made.
The information provides a
reasonable basis on which to Advocacy The threat that a
reach a conclusion professional accountant will
promote a client's or
The accountant’s own
employing organization's
preconception or bias might
position to the point that the
be affecting the accountant’s
accountant's objectivity is
exercise of professional
compromised.
judgment
Familiarity The threat that
There might be other
due to a long or close
reasonable conclusions that
relationship with a client or
could be reached from the
employing organization, a
available information
professional accountant will
be too sympathetic to their
interests or too accepting of
their work.
Intimidation The threat that
Part 1: Reasonable and a professional accountant will
Informed Third Party Test be deterred from acting
objectively because of actual
The reasonable and informed
or perceived pressures,
third party test is a
including attempts to
consideration by the
exercise undue influence
professional accountant
over the accountant.
about whether the same
conclusions would likely be Part 1: Evaluate Threat
reached by another party.
- An acceptable level is a level at Part 2: Professional
which a professional accountant Accountants in Business
using the reasonable and
Part 2: Professional
informed third party test would
Accountants
likely conclude that the
accountant complies with the A professional accountant in
fundamental principles. business might be an employee,
contractor, partner, director
Part 1: Addressing the Threats
(executive or non) owner-manager,
To deal with threats to compliance or volunteer of an employing
with the fundamental principles, a organization.
professional accountant may:
The legal form of the relationship of
(a) Eliminate the the accountant with the employing
circumstances—including organization has no bearing on the
interests or relationships— ethical responsibilities placed on
that are creating the threats the accountant.
(b) Apply safeguards, if Part 2: Identifying Threats –
available and applicable, to Self-Interest
reduce the threats to an
- A professional accountant
acceptable level
holding a financial interest in, or
(c) Decline or end the receiving a loan or guarantee
specific professional activity from, the employing
organization
Part 1: Actions to Eliminate
- A professional accountant
Threat
participating in incentive
Depending on the facts and compensation arrangements
circumstances, a professional offered by the employing
accountant may: organization
- A professional accountant
Eliminate the
having access to corporate
circumstance that is
assets for personal use
creating the threat
- A professional accountant being
Apply safeguards to offered a gift or special
eliminate or reduce the treatment from a supplier of the
threat employing organization
Part 2: Identifying Threats –
Self-Review
- A professional accountant - An individual attempting to
determining the appropriate influence the decision-
accounting treatment for a making process of the
business combination after professional accountant, for
performing the feasibility study example with regard to the
supporting the purchase awarding of contracts or the
decision. application of an accounting
principle
Part 2: Identifying Threats –
Advocacy
- A professional accountant
having the opportunity to
manipulate information in a
prospectus in order to obtain Part 2: Evaluating Threat
favorable financing.
Professional accountants might
Part 2: Identifying Threats – consider obtaining legal advice
Familiarity where they believe that unethical
behavior or actions by others have
- A professional accountant being
occurred, or will continue to occur,
responsible for the financial
within the employing organization.
reporting of the employing
organization when an Part 2: Addressing the Threat |
immediate or close family Situations
member employed by the Preparation and
organization makes decisions Conflict of Interest Presentation of
Information
that affect the financial Acting with Sufficient
Expertise
Financial Interest
reporting of the organization Inducements including
Responding to Non-
Compliance with Laws and
Gifts and Hospitality
- A professional accountant Regulations
Pressure to Breach
having a long association with Fundamental Principles
individuals influencing business
decisions Part 2: Situations | Conflict of
Part 2: Identifying Threats – Interest
Intimidation Serving in a management or
- A professional accountant or governance position for two
immediate or close family employing organizations and
member facing the threat of acquiring confidential
dismissal or replacement information from one
over a disagreement organization that might be
used by the professional
accountant to the advantage When the professional
or disadvantage of the other accountant knows or has
organization reason to believe that the
information with which the
Undertaking a professional
accountant is associated is
activity for each of two
misleading, the accountant
parties in a partnership,
shall take appropriate actions
where both parties are
to seek to resolve the matter
employing the accountant to
assist them to dissolve their A professional accountant
partnership who intends to rely on the
work of others, either internal
Preparing financial
or external to the employing
information for certain
organization, shall exercise
members of management of
professional judgment:
the accountant’s employing
organization who are seeking The reputation and expertise
to undertake a management of, and resources available
buy-out to, the other individual or
organization
Being responsible for
selecting a vendor for the Whether the other individual
employing organization when is subject to applicable
an immediate family member professional and ethics
of the accountant might standards
benefit financially from the
Discussing concerns that the
transaction
information is misleading
Serving in a governance with the professional
capacity in an employing accountant’s superior and/or
organization that is approving the appropriate level(s) of
certain investments for the management within the
company where one of those accountant’s employing
investments will increase the organization or those
value of the investment charged with governance
portfolio of the accountant or
Requesting such individuals
an immediate family member
to take appropriate action to
Part 2: Situations | Preparation resolve the matter
and Presentation of
Part 2: Situations | Acting with
Information
Sufficient Expertise
Insufficient time for 4. Participates in compensation
performing or completing the arrangements which provide
relevant duties incentives to achieve targets
or to support efforts to
Incomplete, restricted or
maximize the value of the
otherwise inadequate
employing organization’s
information for performing
shares. An example of such
the duties
an arrangement might be
Insufficient experience, through participation in
training and/or education incentive plans which are
linked to certain performance
Inadequate resources for the
conditions being met
performance of the duties
Part 2: Situations | NOCLAR
Part 2: Situations | Financial
( Non-compliance with Laws
Interest
and Regulations)
Situations where an individual has
Fraud, corruption, and bribery
a motive and opportunity to
manipulate price-sensitive Money laundering, terrorist
information for financial gain: financing, and proceeds of
crime
1. Holds a direct or indirect
financial interest in the Securities markets and
employing organization, and trading
the value of that financial
Banking and other financial
interest might be directly
products and services
affected by decisions made
by the accountant Data protection
2. Is eligible for a profit-related Tax and pension liabilities
bonus, and the value of that and payments
bonus might be directly
Environmental protection
affected by decisions made
by the accountant Public health and safety
3. Holds, directly or indirectly, Part 2: Situations |
deferred bonus share rights Inducements (Gifts and
or share options in the Hospitality)
employing organization, the
Offering or accepting inducements
value of which might be
might create a self-interest,
affected by decisions made
familiarity or intimidation threat to
by the accountant
compliance with the fundamental Part 2: Situations | Pressure to
principles. Breach the Fundamental
Principles
Gifts
Pressure from a family
Hospitality
member bidding to act as a
Entertainment vendor to the professional
accountant’s employing
Political or charitable
organization to select the
donations
family member over another
Appeals to friendship and prospective vendor
loyalty
Pressure from colleagues to
Employment or other misstate income,
commercial opportunities expenditure, or rates of
return to bias decision-
Preferential treatment, rights,
making on capital projects
and privileges
and acquisitions
Part 2: Situations | Pressure to
Pressure from superiors to
Breach the Fundamental
perform a task without
Principles
sufficient skills or training or
A professional accountant shall not: within unrealistic deadlines
(a) Allow pressure from Pressure from superiors,
others to result in a breach of colleagues, or others—such
compliance with the as those who might benefit
fundamental principles from participation in
compensation or incentive
(b) Place pressure on others
arrangements—to
that the accountant knows,
manipulate performance
or has reason to believe,
indicators
would result in the other
individuals breaching the Pressure to structure a
fundamental principles transaction to evade tax
