The Role of Ethics in the Accountancy Profession: APES 110

This report delves into the crucial role of ethics within the accountancy profession, highlighting the significance of ethical standards in fostering public trust. It focuses on the APES 110 Code of Ethics for Professional Accountants, issued by the Accounting Professional & Ethical Standards Board Limited. The report examines how adherence to these codes, encompassing principles like integrity, objectivity, professional competence, confidentiality, and professional behavior, is essential for accountants and auditors. It emphasizes the reliance of stakeholders, including investors, on financial reports and the need for transparency and independence in the profession. The report concludes that strict adherence to ethical codes not only enhances public confidence but also elevates the quality of professional services, ensuring financial statements accurately reflect a company's position. It underscores the importance of acting in the public interest and the implications of failing to uphold these standards.

Running Head: Role of Ethics in Accountancy Profession
APES 110: Code of
Ethics for Professional
Accountants

Role of Ethics in Accountancy Profession 1
Role of Ethics and Standards in Generating the Trust of General Public in Accountancy Profession
APES 110 Code of Ethics for Professional Accountant is issued by the Accounting Professional &
Ethical Standards Board Limited and is in effect from 1st July 2011. These codes and standards of
ethics are issued to be followed by the professional accountants of Australia whether they are
performing their professional services in Australia or outside the country. Code of ethics are the
well-established standards of what is considered as ethically right or wrong in terms of obligations,
benefits of the general public, truth and fairness etc. Accounting profession ethics is the application
of moral principles in the accounting and auditing practices so as to act in the interest of all the
stakeholders. The codes are to be followed in true sense by the accounting practitioners to avoid the
disciplinary actions against them. The ethical compliance by the company is the key to gain the trust
and confidence of the public.
The distinguishing feature of the profession of accounting is that the accounting professionals has
the statutory duty to act in public interest. In order to act in general public interest the members of
accounting profession have to strictly adhere to the APES 110 code. Accounting information is the
organised arrangement of the raw accounting data relating to the business operations of the
company presented in the financial terms (George, Jones & Harvey, 2014). The work of accountant
the auditors has an important role for any organisation as the shareholders potential investors and
the other stakeholders of the company put reliance on the financial reports of the company to a
great extent to take informed decisions about the investments made or to be made in the concerned
company (Duska, Duska & Ragatz, 2011). Therefore, the accounting and auditing professionals are
required to maintain a higher level transparency while performing financial reporting functions.
Accountants are the one who prepare and present the financial statements of the company and
auditors are the professionals who provide their opinion on the true and fair view of financial
statements (Kaidonis, 2008) (Rossouw et al., 2010).
APES 110 deals with the code of ethics accounting professionals are required to follow and the
guidance there upon. All the professional accountants are mandatorily required to follow APES 110
while they are engaged in providing professional services (Accounting Professional and Ethical
Standards Board (APESB), 2013). As the members while providing the services are required to satisfy
the clients, at the same time they must also keep in mind their statutory obligations towards their
profession. The codes of ethics prescribed under APES 110 requires a member from accountancy
profession to follow the fundamental principles so as to act in public interest and to generate a
greater degree of trust among them. These principle are explained in details as below:

Role of Ethics in Accountancy Profession 2
Integrity: They must maintain the transparency and remain honest in all their professional
relationships. The members should be fair enough while dealing with the external parties such as
their clients and employers. The professionals must not be associated with any reports, returns and
other forms of communication between company and the outsiders which they believe to be false or
misleading. Rather, they must try to communicate the matter of concern with those charged with
the governance to make the corrections in the statements so as to avoid the falsification of reports.
If the management or those charge with governance are not willing to make the required changes
the professional accountants must make necessary actions to disassociate their name from the
reports.
Objectivity: The members must not allow the undue influence from any part of management to
impact their professional obligations. They must remain unbiased whenever providing the
professional services. The professional accountants must not, under any condition, compromise
their professional judgements with the company’s judgements (Fan, Woodbine & Cheng, 2013). As
their work can be relied upon only when there is an element of independence present in their
services, they must not let their personal relationships with the management impair their
independence and objectivity.
Professional Competence: The professionals are supposed to apply the requisite amount of their
knowledge, skills and due care while performing their duties. The code of ethics requires the
professional accountants to be highly qualified and to possess the required degrees and
certifications of the specified institutions. They must make possible efforts to ensure that the clients
are given the competent services (Trung, 2015). Also, they must ensure that the professional
services they are providing are not breaching the trust of the public in general.
Confidentiality: The professional accountants must not disclose the confidential information in public
which is acquired by them during the course of provisioning of services until or unless disclosure of
such information is in public interest or it is requirement of laws and regulations. While appointing
the professional accountants the company expects them to respect the principle of confidentiality to
the full extent so that the sensitive information which may affect the company’s performance
adversely is not revealed outside. However, when there is any requirement under any regulations to
disclose certain matters which are of public interest the member must disclose them so that they
could take informed decisions.
Professionalism in behaviour: The members of the accountancy profession must not bring disrepute
to their profession while engaged in provisioning of professional services and must abide the rules

Role of Ethics in Accountancy Profession 3
and regulations about the professional behaviour as prescribed by the regulatory bodies (Bayou,
Reinstein & Williams, 2011).
The general public invest their funds in the business of the company but they are not involved in the
business functions of the company. Due to the non-participation in the internal business activities
they do not possess the knowledge of company’s actual functioning and performance (Bampton &
Cowton, 2013). It is of utmost importance for the investors of the company to know about the
company’s financial performance and standing in which they have invested their funds. Financial
reports is the only source of information available with the investors. Therefore, the financial
statements must represent the true picture of company’s actual position in the market. The auditors
are appointed to raise the credibility in the eyes of the investors about the company through the
independent opinion on the fairness of the financial statements (Bennie, Cohen & Simnett, 2011).
The auditors while conducting an audit engagement must ensure that the financial statements that
are prepared and presented by the company are not misleading and are not prepared with the
objective of deceiving the potential investors.
APES 110 provides the code of conduct to the professional accountants whether they are in practice
or not. While performing the assurance services it is the basic requirement for all the professional
accountants to apply the highest degree of knowledge in their work. They must not be negligible
towards their professional duties so as to maintain the confidence and greater level of reliance the
external parties put in their professional work. If any failure is committed in adhering to these codes
of conduct by the professional accountants, it may invite serious disciplinary proceedings against
them.
Acting in public requires the professional accountants to respect the legitimate interests of all the
stakeholders of the company such as the client, government and other regulators, shareholders and
other investors, the providers of finance such as the banks and the financial institutions, employees
of the company, business community etc. As all the stakeholders heavily rely on the objectivity and
the integrity of accountancy profession to properly support the operation of commerce (Houghton &
Campbell, 2013). The extreme reliance over the professional accountants makes it necessary for the
members of accountancy profession to take into account the consideration about the interest of
general public before accepting an appointment as a professional accountant for any company. They
must also bear in mind before acceptance of any accountancy or auditing engagement the level of
public interest in the entity. APES 110 also sets out the guidance for the assurance providers on the
independence which is the prime requirement of every review and assurance practices as it enables

Role of Ethics in Accountancy Profession 4
the maintenance of transparency and truthfulness of the accounting information delivered by the
company in the form of financial reports (Chapple et al., 2010).
It can be well concluded from the above research on the role of ethics in generating the trust of
general public in the accounting profession. Not only to gain the confidence of public in general, the
code of ethics are necessarily required to be adhered to comply with the regulatory requirements. If
the ethical codes are followed strictly this will not only enhance the confidence of public in
accounting profession but also will enhance the quality of professional services by the members. As
financial reports of the company is the only effective way of acknowledging the stakeholders of the
company about the company’s financial performance, it is highly recommended to the professional
accountants to prepare and present the financial statements in the best possible manner in order to
avoid the falsification of the information in the reports. The assurance providers shall follow the
fundamental principles prescribed in APES 110 in providing the professional services.

Role of Ethics in Accountancy Profession 5
References
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