What Are The Five Principles Of Ethics In Accountancy?

Posted on Thursday, December 16, 2021 by Lydia SinclairNo comments
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Accountancy professionals are a vital part of ensuring businesses and other not-for-profit organisations function on a day to day basis through providing consultation, tax, auditing and other financial services.

Professionals working in accounting, from newly hired talent sought out by accountancy recruitment firms to the most tenured and respected accountants on the charter have a responsibility to their client, as well as their firm.

For the former, that means, for example, the responsibility to maintain accountant-client privilege and not disclose business or personal information with any third parties, and for the latter, that means accurately tracking tasks completed and hours taken.

Ethical accountancy can be distilled into five key principles, as described in the International Ethics Standards Board for Accountants (IESBA) Professional Code of Ethics.

These guiding principles are vital components of accountancy and ensure that not only does the industry conduct itself in a manner that reflects and respects the importance of the roles they take, but also how accountants act.in many cases, as public servants or serving in the public interest.

Here are the five principles of accountancy ethics.

 

Integrity

When interacting and working with other people we need to know that they are honest and that their behaviour is consistent with their values, which should themselves be based on a strong set of beliefs and values.

Professional integrity is especially critical to accountants, given the responsibility of accountants and the potential consequences should their integrity be compromised.

Accounts are expected to be honest, fair when working with clients and other people, as well as possessing the strength to stand up for the moral foundations of the accounting profession when faced with an ethical dilemma, and not create reports which have material falsehoods.

 

Objectivity

Often the principle most associated with accountants, objectivity is ensuring that numbers are not deliberately misinterpreted and do not tell lies.

An accountant cannot be biased or work effectively if there is a conflict of interest, and if an

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accountant fears that they may not be able to remain objective when working with a particular client then they should not do any professional work with them.

 

Due Care And Professional Competence

Having a high level of skill and professional knowledge helps to prevent exceptionally costly mistakes, and so requires a high level of expertise and a focus on continuing professional development.

It involves accurate, high-quality work completed carefully and promptly, as well as ensuring anyone working under the accountant is being supervised and has been trained appropriately.

 

Confidentiality

Accountants work in several sensitive fields and will as part of the role gain access to privileged and confidential information.

For example, an accountant may become aware of potential redundancies before an announcement is made, or sales data or even personal information.

They are obliged to keep this information confidential unless they have a legal or professional duty to do so. In other words, if they believe a crime is being committed, they need to blow the whistle.

They also must not take advantage of any information they do get for personal advantage, disclose it after the end of a particular business relationship, and ensure that any subordinates or members of the firm also respect that same duty of confidentiality.

 

Professional Behaviour

A standard part of any ethical business, although with accountancy it does have some specific responsibilities besides what common knowledge would dictate.

An accountant must comply with all relevant laws and regulations, and avoid any conduct that they should know could damage the profession’s integrity.

As well as this they should act in the public interest with all of their business relationships and professional activities, and avoid bringing the profession into disrepute.

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