Professional Ethics in Accounting
• Integrity: Accountants must be straightforward and honest in all professional and
business relationships. This includes not knowingly producing false or misleading
financial statements, as this can mislead others and may involve accepting bribes to
change data.
• Objectivity: Accountants must make their own judgments without bias or conflict of
interest. For example, an accountant should not put a personal expense through the
business or be biased when valuing a family member's assets.
• Professional Competence and Due Care: Accountants must stay up-to-date with
changes in accounting regulations and legislation. They should also maintain the
necessary skills and knowledge to provide a professional service.
• Confidentiality: Accountants are obligated to protect the confidentiality of information
given to them and should not give out financial information to third parties without
permission. Breaching confidentiality is only permissible when required by law, such as
to report money laundering.
• Professional Behavior: Accountants must comply with all relevant laws and regulations
to avoid discrediting the profession. This means not overstating skills to attract new
clients or making unprofessional comments to colleagues.
• Public Interest: Accountants must act in a way that allows the public to have faith in the
financial statements they produce. This includes not misleading the public with
overstated figures when preparing accounts. The public includes investors, owners,
business owners, customers, competitors, and taxpayers.
Accounting Roles and Functions
• Accounts payable: The role of accounts payable is to keep a check on money owed by a
business to pay bills and expenses. This also involves managing relationships with trade
payables and ensuring the business gets the best deals and available discounts.
• Accounts receivable: This role involves checking that a business has received all the
money it is entitled to. This includes tracking invoices to make sure they are paid on time
and ensuring there are no unrecoverable debts.
• Payroll: Payroll is a critical part of an accounting department, making sure that all staff
are paid on time and that the correct amount of tax is paid to the government.
• Reporting and financial statements: This role involves preparing financial reports for
both internal and external use, such as the Income Statement, Statement of Financial
Position, and Statement of Cash Flow.
• Checking the accounts: This role is responsible for controlling the finances of the
business and ensuring the correct procedures are followed. This includes putting systems
in place to prevent fraud and theft and is sometimes called an internal audit.
Key Accounting Concepts
The file also introduces several key accounting concepts, or rules of accounting, that ensure
financial statements are reliable and can be easily compared between different businesses. These
include:
• Business entity
• Materiality
• Consistency
• Accruals
• Money measurement
• Prudence
