Section 110
(Fundamental
Principles)
Week 2
Part 1: Intro to Professional Ethics
Learn
Definitions
NB: You need to go over
definitions and come see me
during my consultation if you
are struggling.
Part 1: Professional Ethics:
Part 2 of the course:
Introduction to Moral
Personal Philosophy
ethics
1. Values = what your
industry defines are a
‘good’ person Professional Business Part 3: Governance from a
2. Principles = what your
ethics ethics philosophical point of view.
industry prescribes as
valuable to do = right
action
Why do we need rules?
Think of what makes a good hammer vs what makes
The good is a someone a good driver The Right is a
category term to category term to
refer to a moral Can we say a hammer is bad or a hammer is wrong? refer to moral
value, goal, or final actions that are
end that is considered right or
meaningful for a wrong based on
person based on a the doctrine they
full or partial follow
comprehensive
doctrine that they
follow
Good Right
A Code of Professional Conduct:
• What is the purpose of a code of professional conduct?
Fundamental Principles Threats to FP Safeguards
Professional virtues
Trust
• Why is trust important?
Public trust Institutional trust Moral trust
Fundamental Principles
• Fundamental Principles:
1) Integrity
(implies fair dealing and truthfulness).
Chartered accountants have an obligation to be straightforward and honest in all
professional and business relationships.
Do not define it as:
- Doing the right thing when no one is watching
Integrity means one should not be associated with: Acting appropriately involves
(a) A false or misleading statement; which two aspects?
(b) Information furnished recklessly; or
(c) Omits or obscures information.
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2) Objectivity:
CA’s have an obligation not to compromise their professional or business judgment because
of 1. bias, 2. conflict of interest or 3. the undue influence of others.
A CA shall not perform a professional service if their professional judgement is or could be
said to bias etc.
When do you think one's objectivity could be infringed on?
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3) Professional Competence and Due Care:
CAs have the following obligations:
(a) Must maintain professional knowledge and skill to ensure that clients receive competent
professional service;
(b) To act diligently in line with their technical and professional standards when providing
professional services.
Professional competence is divided into:
(c) Attainment of professional competence; and
(d) Maintenance of professional competence (requires a continuing awareness of
developments in the industry).
You have the right and responsibility not to carry out any activity if you are not competent
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4) Confidentially
= The right to withhold information from certain persons who should not be privy to it.
Why? – To protect the flow of information for public interest
All CAs are obligated to:
(a) Be aware of inadvertent disclosure
(b) Ensure information remains confidential within the firm.
What other obligations do you have in remaining confidential?
• A CA can use experience gained from previous clients but can not disclose info relating to
previous clients.
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4) Confidentially
Confidential information may be disclosed if:
(a) Disclosure is authorized by the client or the employer (only if permitted by law);
(b) Disclosure is required by law, for example:
- The provision of evidence in the course of legal proceedings; or
- Disclosure to the appropriate public authorities of infringements of the law that have come
to light.
(c) There is a professional duty or right to disclose, when not prohibited by law:
(i) To comply with the quality review of a the Regulatory Board or the Institute
(ii) To respond to an inquiry or investigation by a member body or regulatory body;
(iii) To protect the professional interests of a chartered accountant in legal proceedings; or
(iv) To comply with technical and professional standards, including ethical requirements.
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4) Confidentially
• In deciding whether to disclose confidential information, what factors
should be considered?
• Factors:
Whose interests will be affected or harmed?
Which parties do you need to consider?
If you have all the information?
• Unsubstantiated facts.
• o Incomplete information.
• o Unsubstantiated conclusions.
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5) Professional Behavior:
Obligated to :
1. Legal Compliance
2. Act in the public interest
3. Avoid all behaviour that could discredit the profession.
Do not make exaggerated claims regarding qualifications, experience etc. Why? How might impact
your integrity?
• In marketing and promoting themselves and their work, chartered accountants shall not bring
the profession into disrepute. Chartered accountants shall be honest and truthful and not:
• (a) Make exaggerated claims for:
- The services they offer,
- The qualifications they possess, or
- Experience they have gained; or
• (b) Make disparaging references or unsubstantiated comparisons to the work of others.
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A professional accountant might face a
situation in which complying with one
fundamental principle conflicts with
complying with one or more other
fundamental principles.
• What is one to do?
Obligations Dispositions Consequences Actions Decision-making
Individual vs Communal
truthfulness accountant might consider
consulting,
A professional Diligence on an anonymous basis if
accountant shall: necessary, with:
(a) Be alert to the possibility of • A professional body.
inadvertent disclosure, One must uphold integrity when • A regulatory body.
facing pressure to do otherwise or • Legal counsel.
when doing so
might create potential adverse
personal or organisational
consequences. Act diligently and in
accordance with applicable
technical and professional
Sound judgement standards.
Comply with relevant laws and
regulations Professional judgement
Example:
• An auditor was tasked with reviewing the financial statements of a major
client, a company that had been a significant source of business for the
auditor’s firm for several years. Due to the long-standing relationship and
the substantial fees generated by this client, the auditor felt pressured to
maintain a positive relationship, leading to undue reliance on the client's
explanations for certain questionable transactions. Additionally, the
auditor faced subtle but persistent pressure from the client’s
management, who hinted that any adverse findings* could result in the
loss of future contracts.
* Adverse findings: indicate significant issues, discrepancies, or non-
compliance with established standards, laws, or regulations. These findings
typically reveal problems such as errors, fraud, mismanagement, or other
deficiencies that could negatively impact the financial statements,
operations, or reputation of an organization. Adverse findings often require
corrective actions to address the identified issues.
Next
Week:
• Tutorial start in week 4
• Tutorial sign-up closes on
Friday 3 August 18:00
• Assignment 1 will be
available from 5 August
• My consultation hours are
7:00-9:00 and 12:30-13:30
every Thursday in HB 20-31.2
• Go through the
recommended resources on
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