Codes of Ethics and Professional Conduct for Accountants

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Codes of Ethics and Professional

Conduct for Accountants

1 The Certifi ed General Accountants of Alberta, Code of Ethical Principles and Rules of Conduct. The complete code can be found at: www.cga-alberta.org.

SELECTION FROM THE CERTIFIED GENERAL

ACCOUNTANTS OF ALBERTA’S CODE OF

ETHICAL PRINCIPLES AND RULES OF CONDUCT

CODE OF ETHICAL PRINCIPLES

(a) Responsibilities to Society

Registrants have a fundamental responsibility to safeguard and advance the interests of society. This implies acting with trustworthiness, integrity and objectivity. This responsibility extends beyond a registrant’s own behaviour to the behaviour of col-leagues and to the standards of the Association and the profession.

(b) Trust and Duties

Registrants shall act in the interest of their clients, employers, and interested third parties, and shall be prepared to sacrifice their self-interest to do so. Registrants shall honour the trust bestowed on them by others, and shall not use their privileged po-sition without their principal’s knowledge and consent. Registrants shall avoid con-flicts of interest.

(c) Due Care and Professional Judgement

Registrants shall strive to continually upgrade and develop their technical knowl-edge and skills in the areas in which they practice as professionals. This technical expertise shall be employed with due professional care and judgement.

(d) Deceptive Information

Registrants shall not be associated with any information which the registrant knows, or ought to know, to be false or misleading, whether by statement or omission.

(e) Professional Practice

Registrants shall act openly and fairly towards others in the practice of their profession.

(f) Responsibilities to the Profession

Registrants shall always act in accordance with the duties and responsibilities associ-ated with being members of the profession, and shall carry on work in a manner which will enhance the image of the profession and the Association.

LO Describe the codes of ethics and professional conduct for accountants.

SELECTION FROM THE CODE OF ETHICS FOR

CERTIFIED MANAGEMENT ACCOUNTANTS

3.0 Core Principles

Each article of the code consists of a statement of principle. Each statement of prin-ciple expresses an obligation of the registrant in a general way. The rules are more specific than the statement of principle and frequently include examples to illustrate points. The rules may expand upon a statement of principle, but will not limit the scope of the statement. The rules are mandatory, and state specific duties and obliga-tions of the registrant. The application of a rule in a given case will depend on the particular facts and all circumstances.

The division of the code and rules into articles and the use of headings is for con-venience of reference only and shall not affect their application.

ARTICLE I COMPETENCE AND PROFICIENCY

A registrant has a duty to be competent and should strive for a high level of profi-ciency in the services provided.

A registrant shall perform all services with the degree of care, diligence and skill which would be exercised in comparable circumstances by a reasonably prudent registrant suitably trained and experienced for the competent performance of the services.

A registrant has a duty to serve the employer’s or client’s best interests, subject to limitations imposed by law or professional ethics.

ARTICLE II RELATIONSHIP OF THE REGISTRANT TO THE PROFESSION

A registrant has a duty to uphold the standards and reputation of the profession and to aid in the advancement of CMA Alberta’s goals.

A registrant shall not advise or otherwise assist in committing a crime or fraud.

ARTICLE III RELATIONSHIP OF THE REGISTRANT TO OTHER ACCOUNTANTS

ARTICLE IV CONFLICT OF INTEREST

In each matter, a registrant’s judgment and fidelity to the employer’s or client’s in-terests must be free from conflict of interest.

ARTICLE V CONFIDENTIALITY

A registrant has a duty to keep private and confidential all confidential information.

ARTICLE VI THE REGISTRANT IN ACTIVITIES OTHER THAN

THE PROFESSION OF ACCOUNTING

Activities engaged in by a registrant outside the profession must not compromise the registrant’s professional responsibilities nor bring the profession into disrepute.

ARTICLE VII THE REGISTRANT EMPLOYED OUTSIDE

PUBLIC ACCOUNTING PRACTICE

A registrant employed outside public accounting practice has a duty to serve the employer’s best interests, subject to limitations imposed by law or professional ethics.

ARTICLE VIII THE REGISTRANT AND THE MANAGEMENT AND OPERATION

OF PUBLIC ACCOUNTING PRACTICE

Except where a higher standard is imposed by this code and these rules, a registrant, in managing and operating the registrant’s public accounting practice, shall adhere to the highest business standards in the community.

The registrant has a duty to ensure that the public receives only accurate and rea-sonably complete information about the nature and availability of services in public accounting practice.

SELECTION FROM THE ICAO RULES OF

PROFESSIONAL CONDUCT

To grasp the breadth of the rules of professional conduct, we will review the table of contents for the Institute of Chartered Accountants of Ontario, which includes the following:

FIRST BYLAW OF 1973 FOREWORD

Application of the rules of professional conduct Interpretation of the rules of professional conduct

100 - GENERAL

101 Compliance with bylaws, regulations and rules 102.1 Conviction of criminal or similar offences

102.2 Reporting disciplinary suspension, expulsion or restriction of right

to practice

103 False or misleading applications 104 Requirement to co-operate

105 Hindrance, inappropriate influence and intimidation

200 - STANDARDS OF CONDUCT AFFECTING THE PUBLIC INTEREST

201.1,

.2&.3 Maintenance of reputation of profession

201.4 Advocacy services

202.1 Integrity and due care

202.2 Objectivity

203.1 Professional competence

204 Independence

204.1 Assurance and specified auditing procedures engagements 204.2 Identification of threats and safeguards

204.3 Documentation

204.4 Specific prohibitions, assurance and specified auditing procedures engagements

204.5 Members must disclose prohibited interests and relationships 204.6 Firms to ensure compliance by partners and professional employees 204.7 Independence: insolvency engagements

204.8 Disclosure of impaired independence

205 False or misleading documents and oral representations 206 Compliance with professional standards

207 Unauthorized benefits

208 Confidentiality of information 209 Borrowing from clients 210 Conflict of interest

211 Duty to report breach of rules of professional conduct 212.1 Handling of trust funds and other property

212.2 Handling property of others

213 Unlawful activity

214 Fee quotations

216 Payment or receipt of commissions 217.1 Advertising and promotion

217.2 Solicitation

217.3 Endorsements

218 Retention of documentation and working papers

300 - RELATIONS WITH OTHER MEMBERS OR FIRMS AND WITH

NON-MEMBERS LICENSED TO PRACTISE PUBLIC ACCOUNTING

302 Communication with predecessor

303 Co-operation with successor

304 Joint engagements

305 Communication of special engagements to incumbent 306.1 Responsibilities on accepting engagements

306.2 Responsibilities on referred engagements

400 - ORGANIZATION AND CONDUCT OF A PROFESSIONAL PRACTICE

401 Practice names

402 Use of descriptive styles 403 Association with firms 404 Operation of members’ offices 405 Office by representation

406 Member responsible for a non-member in practice of

public accounting

407 Related business or practice, and member responsible for non-member in such business or practice

408 Association of member with non-members in public practice 409 Practice of public accounting in corporate form

500 - RULES OF PROFESSIONAL CONDUCT APPLICABLE ONLY TO FIRMS

501 Firm’s maintenance of policies and procedures for compliance with professional standards

502 Firm’s maintenance of policies and procedures: competence and

conduct of firm members 503 Association with firms

S U M M A R Y O F E Y K

LO Describe the codes of ethics and professional con-duct for accountants. Each of the three professional

ac-counting bodies in Canada has a code of professional conduct

outlining the ethical standards required of accountants. Failure to comply leads to disciplinary action.

Q U I C K S T U D Y

QS 1-21

Read the article about the Rotary 4-Way Test on Connect. Explain how the article relates to the codes of ethics and professional conduct for accountants.