APES 110 Code of Ethics for Professional Accountants Doc
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Code of Ethics for Professional Accountants (APES 110)
Added on 2020-03-28
APES 110 Code of Ethics for Professional Accountants Doc
Code of Ethics for Professional Accountants (APES 110)
Added on 2020-03-28
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Running head: APES110 1Contribution of APES110 towards Developing Public Trust NameInstitutional AffiliationDate
APES1102Contribution of APES110 towards Developing Public Trust It is important for the accounting profession to restore public trust and confidence. Zucker (1986) notes that public trust is the foundation upon which public trust was founded. Accountability andgovernance reforms have identified the need for corporations and accounting profession to become increasingly accountable than before. Professional accountants and corporations require support from various stakeholders in order to achieve their accountability objective. To gain this support, there must be trust among the parties. Members of the accounting profession are expected to do the right thing by respecting the interest of the stakeholders (Brooks & Dunn, 2011). The accounting profession is expected to develop public trust by conducting themselves in a manner geared towards serving their interests.In 2006, the Australian Professional and Ethical Standards Board (APESB)laid down the APES110 Code of Ethics for Professional Accountants to improve public confidence and prevent undesirable accounting practices (Han Fan, Woodbine, & Cheng, 2013). To provide international credibility, the APES 110 is aligned with the IFAC Code issued by the International Ethics Standards Boardof Accountants (IESBA).In accordance with APES 110, members of CPA Australia are mandated to comply with the fundamental principles of objectivity, integrity, due care, professional competence, and behavior. In addition to satisfying a client’s needs, a professional accountant is required to act in public interest. Although Pflugrath et al. (2007) notes that, when making decisions on ethical issues, accounting professionals in Australia often pay attention to ethical codes of conduct, there exist malpractices that reduce public trust in the accounting profession. Accounting credibility crisis from the Enron case, ArthurAndersen and Worldcom are examples of cases situations whereby ethical codes of conduct failed in ensuring public trust (Brooks & Dunn, 2011). The underlying issue of any financial misconduct case is usually related to trustworthiness. Trustworthy and ethical behavior is essential in accounting and business in general. Due to the fundamental role of accountants in providing financial information to lenders, investors and other stakeholders, they are required to behave responsibly while in their professional capacity and maintain trustworthy and reliable records (Caliskan, Akbas, & Esen, 2014).In order to enhance public trust in the accounting profession, the first aspect to pay attention to is the initial engagement with possible clients. Section 210 of the APES 110 Code underlines the ethical criteria an accountant should comply with before accepting a new engagement or client. An accounting professional is required to consider if the engagement will create threats that may hinder his or her compliance the fundamental principles described in the Code. These threats may result from
APES1103questionable accounting practices or illegal client activity. Furthermore, as per Section 220 of the Code, accounting professionals in public practice are required to identify ethical conflicts of interest and apply relevant safeguards to cope with them. Compliance with Section 210 and Section 220 of the Code wouldmean that the accounting professionals will provide ethical services that are in line with the public interest right from the start. The effect of this is an increased public trust in the accounting profession.As is the case with any professional code,the underlying fundamental of the APES110 Code is independence. Independence is importantin preserving integrity and objectivity. To adopt the independence principle, Sections 290 and 291 of the Code underline the independence requirements required of accounts in public practice.The Code looks at accounting independence from two perspectives; independence of mind and that of appearance. Independence of mind requires accountingprofessionals to uphold their objectivity and resist influences such as client pressure or any other factor that may hinder their independence. Independence in appearance relates to the conclusion of an informed third party on whether objectivity and integrity of an accounting professional have been compromised. By maintaining both mind and appearance levels of independence, accountants will be able to conduct themselves in such a way that reassures the public that their reports and analyses are accurate and free from internal and external threatsMembers of the public usually seek accounting services from an accountant knowing that they can trust the individual's service delivery ability in consistency with professional and ethical standards. The Code requires a member to present internal and external financial information honestly and in accordance with Australian Accounting Standards. This provision enhances public trust by ensuring confidence in the financial information provided by practicing accounting professionals. Members are also required to act in sufficient professional expertise. These all contribute towards cementing a high-quality outlook on the accountancy profession. Members of the public such as investors will have faith in the information provided and make confident investment decisions. Self-interest is among the greatest threats that hinder the development of public interest. According to Sections 240 and 260 of the Code, self-interest is created as a result of issues related to gifts, hospitality, fees and other forms of remuneration.The quoted fee for an engagement may influence the performance of an accounting professional in accordance with accounting standards.Section 260 of the Code stipulates that an informed third party would consider an offer to an accounting professional as inconsequential to the ethical decisions made by the accountant. Safeguards should be applied to offers that hinder the delivery of accounting services as per the fundamental
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