Code of Conduct for Accounting Professionals

Question: Discuss about the Code of Conduct for accounting professionals? Answer: ACCA proposed a Code of Conduct for accounting professionals and it is divided in four parts namely A, B, C, and D. Part A of the code contains fundamental principles that are required to be adhered by professional engaged in the accountancy profession[1]. In the given case scenario, a client of Temple mead Accountants LLP (MWFW) is required to make an additional payment due to a change in the corporate tax regime. Samantha Tibour is a new employee and has been assigned the task of filing the accounts of MWFW without making additional payments by Annabelle, who is a senior partner of the firm. Phillip Witherspoon who is also recruited as a trainee accountant will assist Samantha in this matter. We are required to evaluate the pros and cons of the violations that will take place if accounts are filed without the additional payments with respect to Samantha and Phillips. As far as Samantha and Temple mead are concerned, both of them shall act in the best interests of the public. In this case, general public includes MWFW and the Inland Revenue department. If accounts are filed without paying the additional legislative requirements, it will be a violation of the applicable tax laws and the companies act. At a later stage, when this violation is discovered, penalties will be imposed on MWFW. Therefore, such non-compliance will affect the public at large. The primary objectives of the fundamental principles are[2]: Identify threats to the principles Evaluate the threats Apply safeguards to eliminate the threats Samantha Tibour The first principle violated is integrity. Samantha is required to be straightforward and honest about the work that she is assigned. In the given scenario, she is aware of the consequences of non-compliance and should have reported it to her seniors and advised them against such a malpractice. However, she was much more interested in securing her own position with the firm. This act lacked objectivity and was biased on part of Annabelle by creating an undue influence on Samantha. As a senior partner of the firm, Ananbelle had the responsibility to be honest and truthful and provide an example to the other employees[3]. Instead of following ethical norms, she instructed Samantha to violate legislative requirements on purpose. Both the firm and Samantha had the responsibility to take due care in maintaining and practicing professional knowledge. This was absent in the activities of the professionals and the firm[4]. As a result, it posed a detrimental threat to the interests of the cl ient. Lastly, there was a lack of professional behavior on part of the firm and Samantha by not adhering to the requirements of the law. Non-compliance in such a form discredits the entire profession[5]. Phillip Witherspoon Phillips was recruited as an accountant trainee and was supposed to assist Samantha in filing the accounts of MWFW. However, when he came to know about the situation, he failed to maintain confidentiality and exposed the client and the firm to grave threats of professional misconducts by leaking information to a rival firm. This poses a threat to the goodwill and sustainability of the firm. As a professional, Phillips was required to maintain confidentiality of sensitive information about business relationships of the firm with its clients. Safeguards Safeguards to prevent such violations of the code can be put in place in the following manner[6]: Education and training of the people entering the profession. Continued professional development through regular workshops and meetings. Adherence to corporate governance legislations and requirements. Formulation and adherence to professional standards. Performance evaluation and constant monitoring. Taking disciplinary measure in case of violations. External review by third party professionals. The above safeguards should be implemented within the organization in order to detect and eliminate and deviations from the fundamental principles. There are five fundamental principles provided in the code (Part A) are required to be followed by accounting professionals and firms in order to ensure proper compliance of the applicable laws[7]. Out of the five principles, we will be discussing three and the threats that could arise against such three principles. We will also emphasize on the necessity of devising a proper framework to counter such risks. Integrity This principle imposes on all accounting professional the obligation of being straightforward and honest. Honesty caters to professional integrity and authenticity in work done. The primary aim of this principle is to encourage professional to work without being biased towards self interest and preventing conflicts of interests of any third party involved[8]. According to the principle of integrity, an accountant must not associate with reports, returns and communication where such accountant has reasons to believe that such information: Contains false and misleading information Contains recklessly furnished information, and Incomplete information In cases where an accountant becomes aware that particular information has the above elements, he/she should disassociate from such information. Objectivity This principle requires accounting professionals not to compromise with biasness, conflicts of interests and undue influence of others. Accountants are obliged to follow these instructions at all times of their professional life. A professional shall not perform any professional service in cases where his/her obligations are violated. Professional Competence and Due Care This principle imposes the following obligations on accounting professionals[9]: Ensure that clients and employers receive proper and required professional services from them. To act diligently according to the proposed standards of service. Attain and maintain professional competence. Take due care of the interests of the clients in a proper manner and according to the prescribed standards honestly. Continuous knowledge gathering about technical, professional and business developments. Acting responsible according to the requirements of the assignment and within the given time frame. Communicating any shortcomings and drawbacks of the assignment to the employer and the clients, wherever required. A recent case was the case of Google, where the UK tax authorities instructed the company to pay 130 million in back taxes[10]. On the other hand European tax authorities are also trying to levy more taxes on the company as reported by BBC News. Therefore, it can be seen that professionals are required to file proper financial documents and are required to impart their obligations in a most diligent manner. References 'Code of Ethics' (Cimaglobal.com, 2016) https://www.cimaglobal.com/Professional-ethics/Ethics/CIMA-code-of-ethics-for-professional-accountants/ accessed 6 March 2016 'Code of Ethics for Professional Accountants' (2016) https://www.ifa.org.uk/files/codeofethicsforprofessionalaccountantsv3-1.pdf accessed 6 March 2016 'CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS' (2016) https://www.ifac.org/system/files/publications/files/ifac-code-of-ethics-for.pdf accessed 6 March 2016 'Ethical Dilemmas Case Studies' (2016) https://www.icaew.com/~/media/corporate/files/technical/ethics/ethical%20case%20studies/ccabeg%20case%20studies%20accountants%20business.ashx accessed 6 March 2016 'Ethics | Regulations, Standards and Guidance | Members | ICAEW' (Icaew.com, 2016) https://www.icaew.com/en/members/regulations-standards-and-guidance/ethics accessed 6 March 2016 'Google Tax Row: What's Behind The Deal? - BBC News' (BBC News, 2016) https://www.bbc.com/news/business-35428966 accessed 6 March 2016 'PART A - GENERAL APPLICATION OF THIS CODE' (Icaew.com, 2016) https://www.icaew.com/~/media/corporate/files/members/regulations%20standards%20and%20guidance/ethics/code_of_ethics_part_a_general_application_1_jan_2011.ashx accessed 6 March 2016 'PRACTICE DIRECTION 46 - COSTS SPECIAL CASES' (Justice.gov.uk, 2016) https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-46-costs-special-cases/practice-direction-46-costs-special-cases accessed 6 March 2016 [1] 'Code of Ethics' (Cimaglobal.com, 2016) https://www.cimaglobal.com/Professional-ethics/Ethics/CIMA-code-of-ethics-for-professional-accountants/ accessed 6 March 2016. [2]'Code of Ethics for Professional Accountants' (2016) https://www.ifa.org.uk/files/codeofethicsforprofessionalaccountantsv3-1.pdf accessed 6 March 2016. [3] 'Ethical Dilemmas Case Studies' (2016) https://www.icaew.com/~/media/corporate/files/technical/ethics/ethical%20case%20studies/ccabeg%20case%20studies%20accountants%20business.ashx accessed 6 March 2016. [4] 'PART A - GENERAL APPLICATION OF THIS CODE' (Icaew.com, 2016) https://www.icaew.com/~/media/corporate/files/members/regulations%20standards%20and%20guidance/ethics/code_of_ethics_part_a_general_application_1_jan_2011.ashx accessed 6 March 2016. [5] 'CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS' (2016) https://www.ifac.org/system/files/publications/files/ifac-code-of-ethics-for.pdf accessed 6 March 2016. [6] 'Ethics | Regulations, Standards And Guidance | Members | ICAEW' (Icaew.com, 2016) https://www.icaew.com/en/members/regulations-standards-and-guidance/ethics accessed 6 March 2016. [7] 'PART A - GENERAL APPLICATION OF THIS CODE' (Icaew.com, 2016) https://www.icaew.com/~/media/corporate/files/members/regulations%20standards%20and%20guidance/ethics/code_of_ethics_part_a_general_application_1_jan_2011.ashx accessed 6 March 2016. [8] 'PRACTICE DIRECTION 46 - COSTS SPECIAL CASES' (Justice.gov.uk, 2016) https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-46-costs-special-cases/practice-direction-46-costs-special-cases accessed 6 March 2016. [9] 'PART A - GENERAL APPLICATION OF THIS CODE' (Icaew.com, 2016) https://www.icaew.com/~/media/corporate/files/members/regulations%20standards%20and%20guidance/ethics/code_of_ethics_part_a_general_application_1_jan_2011.ashx accessed 6 March 2016. [10] 'Google Tax Row: What's Behind The Deal? - BBC News' (BBC News, 2016) https://www.bbc.com/news/business-35428966 accessed 6 March 2016.