Code of Ethics for Accountants

This assignment delves into the Code of Ethics for Professional Accountants, highlighting its significance in regulating the accounting profession. It examines fundamental principles such as integrity, objectivity, professional competence, confidentiality, and professional behavior. The analysis focuses on sections concerning fees, marketing practices, independence, and the overall impact of the code on public trust and confidence in accountants.

Running head: Public Trust in Accounting Profession
Ethics
Name of Student
Student’s Number

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Introduction
APES 110, the code that regulates the conduct of professional accountants has the main
distinguishing factor in the accountancy profession is that it mainly promotes the public
interest. It is, therefore, a very vital profession (Deegan, 2012, p. 46). Accounting entails the
comprehensive and systematic method through which financial transactions of a business
organization are recorded the analysis, reporting, the summary of the said transactions and
conveying them to the relevant oversight bodies and tax collection bodies. The external bodies
rely on the information contained in such reports, and therefore, they should be prepared in a
manner that complies with the international accounting principles. The code, therefore, play a
major role in ensuring that such financial records of a business enterprise are done in a manner
that complies or follows the laid down principles.
The loss of public confidence was necessitated by some factors that affected the
profession's reputation. For instance, there had been a rise in non-audit consulting and other
accounting services where clients used to pay more for consulting than the auditing itself.
Corporations therefore resorted to consultancies instead of auditing all the company's books of
accounts. Additionally, there had been a downward pressure exerted on the amount of auditing
fees. Accounting firms were for a very long time put under pressure to charge low auditing fees
or face the consequences of loosing auditing contracts. This affected their relationships with
their clients and to a larger extent the public at large (Barth et al. 2008, p. 470). There was also
the reliance by clients on more cost-effective methods of auditing, and in the process, they
branded the accounting profession negatively making the public to lose the faith and trust in
the profession.
The Code of Ethics restoration of public faith in the accounting profession
Though the members of the public had lost interest and faith in the accounting
profession, the image has been revived through the code of ethics for professional accountants.
The code, when complied with, is a great attempt at restoring public faith in the profession. The
code requires members of the accounting profession to act in the public interest. As outlined in
paragraph 100.1, a member should not strive to satisfy those needs of a client or the employer
but should focus on public interest and to strive to achieve the same. To ensure that members

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act in the public interest, the code outlines the fundamental principles to guide members in
their day to day activities (Arens et al. 2007, p. 100). Paragraph 100.5 of the code outlines the
fundamental principles thus:
1) Integrity – members of the profession should be honest and straightforward in all the
professional activities and even in business relationships.
2) Objectivity – members should avoid any element of bias, undue influence or any form of
conflict of interest in their duties such that their primary professional duties are
overridden, or their business judgments are influenced in any way.
3) Professional competence- members are required to at all times maintain the
professional knowledge or skill at the optimum level so that clients and employers as
well receive services that are up to date with the current changes in practice, the new
legislations and according to the set and laid down international professional standards.
4) Confidentiality – a member would naturally acquire certain confidential information in
the course of business. The code requires members not to disclose such information
without the express authority of the client to third parties or any other person. Such
information can only be disclosed where there exists a professional or legal right that
allows one to make such disclosure (Haswell & McKinnon, 2003, p. 14). Members are
also prohibited by the code against using confidential information received in the course
of business for personal use to the disadvantage of the client.
5) Professional behavior – members are required to act in a manner that does not discredit
or injure the image of the profession. They should obey and adhere to all the laws or
regulations that guide professional accountants.
The fundamental principles discussed above guide the members of the accounting
profession in their daily actions. Where members carry out accounting services according to the
fundamental principles, public confidence is likely to be greatly boosted, and this is the main
objective of the code. The code sets the required principles that guide the profession so that
public image and confidence is restored.
Though threats exist which are likely to compromise the compliance of members with the
fundamental principles set by the code. The code mitigates this by giving and creating options

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to the member faced by such threat so that the said member acts in mitigating and dealing with
the threat to avoid soiling the profession. Where it has proved difficult to eliminate the threat,
the said member should avoid the circumstance or relationship that creates such threat
(Epstein & Mirza, 2006, p. 68). Where, for instance, a member is faced with such threat, he or
she is required to resign from such engagement or the employment.
Paragraph 100.13 creates safeguards or such actions that eliminate the threats. The
safeguards are created by the accounting profession or regulations and those in the work
environment. The safeguards assist in resolving ethical conflicts that are likely to affect the
services offered by accountants. While resolving such conflicts, the said member or members
should be guided by; the ethical issues involved, the fundamental principles that relate to the
issue in question, the laid down internal procedures any other available alternative course of
action. The code categorizes members into ones in public and those in business (Hung, 200, p.
412).
The members of the profession whether in public or private practice have a duty to
ensure that the opinion that the public has of them should be improved (Velayutham, 2003,
p.490). As a result, such members are required to assist the public in enhancing the trust of the
members of the public regarding the profession by undertaking and avoid the following;
Conflict of interest – section 220 requires that members of accounting profession should
uphold the code of conduct and avoid conflict of interest. Where a member of public or
business is faced with a client where a conflict of interest is likely to arise, such member should
cease acting for the said client.
Fees and other forms of remuneration – under section 240 of the code, both contingent
and referral fee or commissions are likely to lead to threats that affect compliance with the
code and fundamental principles. Members should, therefore, quote reasonable fees and avoid
any attempt to overcharge members of the public.
Marketing of professional services – section 250 requires that where members of the
profession decide to advertise their services, they need to do so in a manner that does not
bring disrepute to the professional. The advert should not promise impossibilities or state
charges that are on the face of it very misleading.

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Independence – under sections 290 and 291, independence is required for auditing,
review or other assurance engagements. The services of accountancy should not be influenced
by any person whether in authority or otherwise. They should be allowed to work
independently.
Conclusion
The code is a major milestone in taming and regulating the accounting profession. By setting
standards and the acceptable conduct, accountants have no otherwise but to act according to
the laid down fundamental principles or face the consequences of derogation (Milton-Smith,
1997, p. 1490). The code has helped restore public opinion and trust in the accounting
profession. It has done this by prescribing fundamental guiding principles that ensure the
provision of standard, cost-effective and quality services with receives excellent customer
satisfaction and feedback; hence a finding that the profession has once again helped itself to
regain public confidence.

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References
APES 110, (2013) Code of Ethics for Professional Accountants
Deegan, C. (2012). Australian financial accounting McGraw-Hill Education Australia
Hung, M. (2000) Accounting standards and value relevance of financial statements: An
international analysis Journal of accounting and economics, 30(3), 401-420
Deegan, C. (2013). Financial accounting theory McGraw-Hill Education Australia
Barth, M. E., Landsman, W. R., & Lang, M. H. (2008). International accounting standards and
accounting quality Journal of accounting research, 46(3), 467-498
Haswell, S., & McKinnon, J.(2003) IASB standards for Australia by 2005: Catapult or Trojan
horse Australian Accounting Review, 13(29), 8-16
Epstein, B. J., & Mirza, A. A. (2006) Wiley IFRS 2006: interpretation and application of
international financial reporting standards. Wiley
Arens, A. A., Best, P., Shailer, G., Fiedler, B., Elder, R. J., & Beasley, M. (2007) Auditing and
assurance services in Australia: an integrated approach. Pearson Education Australia
Velayutham, S. (2003) The accounting professions code of ethics: Is it a code of ethics or a code
of quality assurance? Critical Perspectives on Accounting, 14(4), 483-503
Milton-Smith, J. (1997). Business ethics in Australia and New Zealand Journal of Business
Ethics, 16(14), 1485-1497