Ethics and professionalism

Chapter overview
This topic introduces the broad ethical and professional values which underpin all the other
professional skills and behaviours explored throughout this module. Ethical and professional
values should provide a framework and a moral compass for the accountant or other professional
to guide their behaviours when demonstrating the specific professional skills covered in this
module.
This topic focuses on:
(a) What is ethics and why it is important in the accounting profession
- Perspectives on ethics
- Different ethical theories or branches
- Ethics and professions
(b) Identifying ethical dilemmas
- Different approaches to ethical decisions
- The ACCA ethical framework and its 4-step process
(c) Taking ethical decisions
- How to consider professional ethics and personal values when taking ethical decisions
1

Learning outcomes
After completing this topic, you should be able to:
(a) Explain what ethics is and why it is important in the accounting profession
(b) Identify ethical dilemmas
(c) Take ethical decisions
1

Context Section
Awareness of ethics and the rules of professional behaviour allows you to make decisions in an
objective manner, which makes it easier for you to remove your personal feelings from business
decisions. In other words, when you think about ethics in the context of business, it’s about
making sure that you are doing what is right and best for your company, rather than what will
make you feel better or will benefit only yourself or your team members.
Ethics in business is a broad term that includes many different concepts, such as morality,
integrity and justice. In addition to being objective, it’s also important to understand the
difference between ethics and legality. While both concepts have their own definitions, they can
sometimes overlap when dealing with various situations at work. Ethical values are important
because they help to ensure that your company maintains a good reputation as well as
preventing you from doing anything illegal, unethical or unprofessional.
Understanding and acting more ethically and professionally contributes to your own job
satisfaction, improves working relationships and increases your chances of advancing your
career. At the organisation level, a company staffed by ethically-minded employees enjoys a
clean public image, attracts the best talent and is more likely to enjoy sustained growth.
For accountants, as for other professions, there is an obligation to society that goes beyond their
client relationship, and a code of ethics that they must follow. The accounting profession
recommends using a principles-based approach when making ethical decisions, and has
developed an ethical framework to help accountants apply those principles.
Accountants experience many occasions when they need to choose between right and wrong,
and the consequences of those decisions may often be significant. It is important therefore to
become aware of your personal approach to considering ethical questions, to help you mitigate
any detrimental impact of your own personal ethics, so that you are able to take a more objective
approach within the field of professional ethics.

Ethics and professionalism 2

 1 What is ethics and why it is important in the accounting
profession
Ethics is a branch of philosophy which focuses on questions of what is right or wrong, good, or
bad, and what people should or should not do. It is the system of beliefs and opinions which
determines the value, the rightness or wrongness, of all behaviour.
The Cambridge Dictionary defines ethics as “the study of what is right or wrong or a set of beliefs
about what is morally right or wrong”. In this sense, we can think of ethics as the ideas which
guide us towards ‘good’ or beneficial behaviour.
My Own Business Institute (MOBI) at Santa Clara University explains that ethics are the principles
which contribute to our decision-making. They help us to avoid negative behaviours, such as lying
or breaking promises, and encourage us towards positive conduct which improves our lives and
the lives of others around us (Santa Clara University, 2022).
Santa Clara University (2022) further points out that behaving ethically is not the same as
following the law. Many laws follow ethical standards – for example, murder is both illegal and
unethical. However, there have been many examples of laws which are not always considered
ethical, such as the One Child Policy in China.
As an accountant there will be many occasions when you need to choose between right and
wrong. Making the wrong choice can lead to serious consequences, including corporate failure,
loss of reputation, fines and even jail sentences. There are different branches of ethics, meaning
people approach ethical questions from different points of view.

1.1 Perspectives on ethics

Three very broad perspectives of looking at ethics have developed over time (ACCA, 2023):
• Good intentions
This means behaviour is considered ethical if it motivates by general well-being. Good
behaviour follows from good thinking.
• Rules conformance
Ethics is understood as a list of things to do and to not do. Sometimes the list gets long and
complicated and needs to be interpreted by a whole institution of people. The ethical person
from this perspective is the one who conforms to the rules.
• Competence
An ethical person is someone who can make decisions based on principles and then act upon
them. So, ethics is thought of in terms of ability rather than attitude.

1.2 Branches of ethics

Over centuries of philosophical debate, ethics has developed several schools of thought, or
different ethical theories about ‘doing the right thing.’ These theories reflect scholarly differences
between professional philosophers, but they also reflect differences in style of moral reasoning
that can be observed in everyday moral reflection. Morality is about the principles used to judge
right from wrong. But whereas morality consists of the various principles that guide our decisions,
ethics is the careful, methodical, and scholarly study of which principles should guide our actions.
But note that for most purposes, the words can be used interchangeably so we can speak of
having either ‘ethical obligations’ or ‘moral obligations’.

Different ethical theories and accountant examples

(ACCA, 2023)

3 Ethics and professionalism

Ethical theory Approach Limitation Application Accountant
example
Duty to others Act according to Someone has to If one person A professional
principles that decide what the were to ignore accountant
everyone should principles are. traffic lights, would not
follow, as part of consider what deliberately
a duty to others. would happen if issue false or
Recognise everyone did so. inaccurate
everyone as financial
equals, and not statements. If
assume that the everyone did so,
rules are any no statements
different for us could be trusted
personally than and as a
they are for consequence not
other people. only would the
whole
accountancy
profession be
brought into
disrepute, but all
financial
statements
would have no
value to their
users.

Consequences Make decisions How to Cost-benefit An accountant

/utilitarianism based on the determine which analysis: would consider
consequences - consequences assigning values preparing an
both positive matter: e.g., to the costs and integrated report
and negative - should we focus benefits of an in order provide
for those on promoting action and more holistic
involved. pleasure and seeing how they information
An action is right avoiding causing add up. This which would
if it leads to the pain, or instead practice is often benefit the
most beneficial on promoting used in greatest number
outcomes and people’s actual evaluating new of people. As a
the least bad well-being, projects. result
outcomes, for regardless of stakeholders
the greatest whether doing inside and
number of so makes them outside the
people. happy? organisation
would be able to
make more
informed
decisions.

Virtue theory Decide what How to agree The qualities of In deciding

makes a good what constitutes good financial whether to agree
person, instead a virtue? It can reports have to a client’s
of what makes a vary according come to be: request to use a
good action, to culture and relevance for questionable
and act over time. decision- method for
accordingly. I.e., making; valuing
define the reference to a inventory, an
virtues such a wider accountant

Ethics and professionalism 4

Ethical theory Approach Limitation Application Accountant
example
person would conceptual would ask:
embody. framework; and ‘What would a
presenting the conscientious
broader accountant do in
economic such a situation?
substance of What would one
business of my respected
mentors do?’

Social contract Think about The agreement When making an An accountant

theory ethics as referred to by ethical decision has to decide
embodying a set social contract you ask yourself: between loyalty
of rules agreed theory is entirely ‘What rule would to a client in
upon by imaginary. Why reasonable, terms of
reasonable consider yourself unbiased people mitigating their
people to bring bound by an agree to?’ tax liability and
order to social agreement that presenting a true
living. You then never and fair
follow such rules, happened? assessment of
regardless of financial
whether they statements.
benefit you. Both of those
options involve
important social
values so the
accountant
might ask:
‘What sort of
rule for guiding
my decision
would unbiased
people without
such loyalties
agree to?’

Confucian ethics Provide In a society Self-reflection In deciding

harmonious where and learning whether to agree
relationships relationships are from to a client’s
within society, considered more experienced request to use a
the family, and important than people are seen method for
the individual. the laws as the main valuing
The emphasis on themselves, roads to wisdom inventory, an
experience leads corruption and and self- accountant
to respect and nepotism may harmony. might consider
reverence for the be tolerated. agreeing to a
past, the aged, method which
and for one’s most benefit’s
ancestors. the interest of
the client,
because doing
so would create
greater harmony
with that client.

The golden rule The classic The rule is based ‘I will not cheat You disclose all

5 Ethics and professionalism

 Ethical theory Approach Limitation Application Accountant
example
golden rule is to: on your own that person information that
‘do unto others feelings of how because I do not may be relevant
as you would you yourself want them to in financial
have them do would want to be cheat me.’ reports because,
unto you.’ treated. But your if you were the
own needs and reader of those
preferences financial
might not be statements, you
typical. E.g., the would expect to
fact that you receive all the
personally do information, and
not value disregard any
privacy does not that is not
mean that you relevant to you.
don’t owe others
an obligation to
respect their
privacy.

Mirror test Imagine you’re The decision What will others In deciding
looking in a taken will think?’ whether to agree
mirror and ask depend on the Others, meaning to a client’s
yourself: is this level of the a friend, a request to use a
legal? If it is not standards you parent, a questionable
legal, don’t do it. hold yourself to spouse, a child, method for
in the mirror. a manager, the valuing
media, or inventory, an
someone else accountant
whose opinion is thinking in terms
particularly of this rule of
important to thumb would
you. consider how a
story about this
action would
look on the front
page of the local
newspaper.

1.2.1 Ethics and gender

Some researchers have questioned whether men and women approach ethics in a different way.
There is considerable debate over such an idea. See what you think by taking the Justice vs Care
quiz in the Prepare section and then add your result and your response to it in the Reflection Log
in the Consolidate section.

1.2.2 Ethics and religion

For some people, religion plays an important role in their moral beliefs and moral reasoning.
People who belong to a faith-based community, may learn ethical behaviour from the religious
leader in your church, temple, mosque, synagogue, or other place of worship, which provide
another point of view to approach decision-making at work.
It is important to remember that secular ethical perspectives need not always conflict with
religious beliefs. Santa Clara University (2022) points out that while many religions encourage
highly ethical behaviour, it is not only religious people who behave ethically.
Most, if not all, religions contain some direction about treating other people fairly, which is also
the premise of most ethical models, and seen as good business practice.

Ethics and professionalism 6

 For professionals working with people, it is important to become aware of one’s own ethical way of
thinking and to understand that other people may think about doing the right thing in a different
way from you.

1.3 Ethics and professions

Ethics in business, or professional ethics, refers to the set of principles which guide behaviour in
the workplace and ensure that employees, and the organisation itself, conduct themselves in a
way that is not harmful to stakeholders and other entities. In essence, professional ethics follow
the principles outlined above, and are characterised by behaviours such as:
• Honesty
• Loyalty
• Respect for others
• Adherence to the law
• Accountability
Historically, professions such as medicine and law had codes of ethics and members were
required to swear an oath to uphold those codes, thereby ‘professing’ to a higher standard of
responsibility. In modern times, membership of a profession is usually restricted and regulated by
one or more professional associations, and rigorous training and additional schooling is required.

Key learning point

Professionals typically proclaim an obligation to society beyond their client relationship and point
to a code of ethics that they follow. Being a member of the accounting profession for example,
means ‘professing’ to a higher standard of accountability (ACCA, 2023).

1.3.1 Ethics in the accountancy profession

The ACCA (Association of Chartered Certified Accountants) describes the difference between
personal and professional ethics. Personal ethics are defined as your own sense of right and
wrong and the ability or desire to ‘do the right thing’. Not only does this include knowing what you
are supposed to do (or avoid) but also wanting to do it. Professional ethics, on the other hand, are
the set of rules of behaviour handed to you by a company or professional body like the ACCA .

1.3.2 Codes of conduct

In a business setting, rules of acceptable, fair and honest behaviour are set out in a document
called a code of conduct or code of ethics. This describes the values and desired behaviour which
the company would like to encourage. It also acts a central guide for employees to support their
decision-making and navigate challenging ethical dilemmas and helps regulate employee
behaviour and ensures the organisation complies with the law.
A code of conduct typically covers certain areas of employee behaviour, including:
• Company values
• Dress code
• Employee break policy
• Communication
• Discrimination
• Using company property
• Illegal activities such as corruption and fraud

1.3.3 Professional body code of conduct

While the regulation of the dress code and break times contribute to greater personal
responsibility in each employee, other parts of the code reduce the possibility of employees
committing serious crimes. This is especially important in certain professions where the potential
for illegal behaviour can be high, such as accounting. An accountant may handle large sums of
money and be responsible for the production of important financial statements, so professional
bodies like the ACCA are careful to guard against ethical issues and require their members to act

7 Ethics and professionalism

 with integrity (honesty in business relationships), due care (providing their services diligently and
to a high standard) and with a level of professional behaviour (behave with courtesy and
consideration towards all stakeholders).
There are a number of accounting professional bodies, but the main ones are:
• ACCA
• CIMA (Chartered Institute of Management Accountants)
• ICAEW (Institute of Chartered Accountants in England and Wales)
All of these bodies have their own codes of conduct which are based on a similar set of widely
agreed-upon ethical principles.
When making any decision professional accountants must first follow the laws of the country in
which they are working, the particular rules that govern them, and the IESBA Code (International
Ethics Standards Boards for Accountants) which serves as the foundation for codes of ethics for
the International Federation of Accountants (IFAC) (the global advocacy organisation for the
accountancy profession) and IESBA (IESBA, n.d.) While these are ethical principles for the
accounting profession, they would equally apply to any profession (ACCA, 2023).

2 Identifying ethical dilemmas

We have seen in section 1 that there are different branches of ethics to help us identify our own
personal, ethical standards. In this section we consider how to apply the professional ethics of
being an accountant and the different kinds of arguments that might influence us when making
decisions.
It is important to maintain objectivity when faced with an ethical dilemma, and this may require a
possible separation between our own personal values and those demanded by our profession.
A dilemma is a situation where the possible alternative courses of action are equally undesirable
(Cambridge Dictionary, 2023). Whatever outcome is chosen will not be perfect and will have
some downsides.
For an example of just such a situation, refer to the Thinking about Ethical Dilemmas video in the
Prepare section to understand that the reason for making a decision becomes more important
than the decision itself.

2.1 Rules versus principles

Two main approaches to solving ethical dilemmas are using rules versus using principles.
Professional accountants face many decisions in their work. IFAC recommends that professional
accountants follow a principles-based approach and that is what ACCA uses (ACCA, 2023).

Key learning point

Professional accountants follow a principles-based approach to solving ethical dilemmas.

Illustrative example (ACCA, 2023)

You are asked to act for two clients that are in competition with each other.
• Following a rules-based approach you would check the rulebook to see if what you were
planning to do is prohibited. If there is no specific rule against it, you could go ahead and act
for both of them.
• Taking a principles-based approach you would first think of the fundamental principles (see
section below) to determine if any of them would be threatened. If no principal would be
threatened, then you could go ahead and act for both clients. Alternatively, if threats were
identified, you would have to assess the significance of the threat. Next you would have to
assess with any whether any measures could be put in place to address them.

Ethics and professionalism 8

Differences between rules and principles
(ACCA, 2023)

9 Ethics and professionalism

Approach Rule-based Principles-based
Scope of consideration Limited to looking for a rule You have to think more widely
that prohibits you from doing and consider whether or not a
whatever it is you are principle is being violated or
considering. even threatened.

Reliability and flexibility Less reliable: limited to a rule If an action is planned, its
being in place. It is difficult to appropriateness is assessed.
have a written rule that covers If it goes against the
every possible situation. principles of professional
Can lead people to start behaviour and values, then
looking for loopholes - the action should be avoided,
situations that are not even if no rules exist
prohibited – and to use them concerning this specific
to their advantage. action.
E.g., in taxation where tax This leads to a more flexible
rules are established, and approach, which can cover
some accountants look for new situations that might not
loopholes in order to avoid have been thought of.
tax. It can sometimes seem more
difficult, because you need to
carefully think through every
situation.

Onus of responsibility An authority has to create a The responsibility is on the

list of prohibited activities for professional, to decide if, in
you to obey. each specific case, a principle
is being violated.

Ethics and professionalism 10

2.2 Fundamental principles
As a human our ethics are shaped by experience. As professional or trainee accountants we are
bound by the laws of our country and all regulations that flow out of them. ACCA member
students are also bound by ACCA’s five fundamental principles:
(a) Integrity
(b) Objectivity
(c) Professional competence and due care
(d) Confidentiality
(e) Professional behaviour.

ACCA’s Five Fundamental Principles

(ACCA, 2023)

Principle Meaning In other words…

Integrity Be straightforward and honest in all Do not lie and do not issue false or
professional and business misleading information. I.e., do the
relationships. right thing even if no one is
watching!

Objectivity Do not allow bias, conflict of interest Your professional and business
or undue influence of others to judgement should be based on fact
override professional or business and on what is in the best interests
judgements. of stakeholders or others.
Judgement should not be based on
what is in your own personal
interest, or in the interests of those
who have power or influence over
you

Professional Maintain professional knowledge Only perform work if you are

competence and and skill at the level required to competent to do so.
due care ensure that a client or employer Keep up to date with accounting
receives competent professional matters.
services based on current ACCA members have continuing
developments in practice, legislation professional development (CPD)
and techniques. responsibilities.
Act diligently and in accordance
with applicable technical and
professional standards when
providing professional services.

Confidentiality Respect the confidentiality of Do not talk about your clients or use
information acquired as a result of information that you have learned
professional and business about them for your personal gain
relationships and, therefore, not or for the gain of others.
disclose any such information to Maintain your silence even after the
third parties without proper and professional relationship with the
specific authority, unless there is a client ends.
legal or professional right or duty to
disclose’.
Confidential information acquired
as a result of professional and
business relationships should not be
used ‘for the personal advantage of
the professional accountant or third
parties.’

11 Ethics and professionalism

 Principle Meaning In other words…
Professional Comply with relevant laws and Be courteous and considerate to
behaviour regulations and avoid any action people, and always behave so that
that discredits the profession. a ‘reasonable and informed third
party’ who knows all the facts would
also think you are acting
professionally.

Note the following in addition when considering ethical decisions:

• It is important to put principles into context.
• You must always obey the laws of your country.
• Then you must consider the more detailed rules laid down by your governing body regarding a
specific situation, such as promoting your practice, charging fees, accepting new clients, or
handling clients’ monies.
• If a particular ethical dilemma is not covered by your organisation or your professional body’s
rules, you must consider the fundamental principles, and whether they might be breached or
threatened by the proposed course of action

2.3 The ACCA ethical framework

As discussed, it is difficult to create a rule for every possible situation and even more difficult to
remember the right rule at the right moment. The International Ethics Standards Board for
Accountants (IESBA) uses the principles-based approach and has developed a framework to help
accountants apply those principles, upon which the following ACCA framework is based (ACCA,
2023).
The framework consists of a series of ordered questions to work through when confronted with an
ethical dilemma:
(a) What is the real issue here? (What are the relevant facts?)
(b) Are the fundamental principles threatened?
(c) Is the threat significant?
(d) Are there safeguards that can eliminate the threat or reduce it to an acceptable level?

The ACCA Framework and Ethical Dilemmas

(ACCA, 2023)

Questions to Meaning
answer
What is the real Sometimes the real issue is obvious. Sometimes, it is not, so you have to ask
issue here? a lot of questions before you find out what the issue really is.

Are the Is one or more of the fundamental principles being compromised, and in
fundamental what manner?
principles
(a) Integrity
threatened?
(b) Objectivity
(a) Professional competence and due care
(b) Confidentiality
(c) Professional behaviour
See below for sources of threats to these.

Is the threat Determining the significance of a threat depends on the individual

significant? situation. Only you or a ‘reasonable and informed third party’ can decide
whether the threat is significant.

Ethics and professionalism 12

 Questions to Meaning
answer
Always consider what others would make of the position and your actions.
The ‘reasonable and informed third party’ is a phrase that is often used in
these situations. It is the theoretical voice of reason you would consult to
help you gain perspective on an issue.

Are there If a threat is significant, put safeguards in place or use the ones that
safeguards that already exist. E.g., safeguards can range from government regulations and
can eliminate the professional standards, to people or policies in the workplace.
threat or reduce
it to an
acceptable
level?

2.3.1 Sources of threats to the fundamental principles

A practising accountant may face situations where their ethical stance is challenged and they
may be tempted to act unethically, for example, by altering or omitting financial data relating to
a company, exaggerating its revenue or providing incorrect information to a tax authority
(Trending Accounting, n.d.). These are called threats to fundamental principles of ethics or ethical
threats.
• Self-interest threats: if you or a close family member stands to gain (or not lose) something
from the incident, usually your integrity or objectivity would be at risk.
• Self-review threats may be significant when you are in a position of having to review your own
work which could put your objectivity at risk.
• Advocacy threats exist if you are promoting a position that compromises your integrity, or
promoting a position or opinion to the point that subsequent objectivity may be compromised.
• Familiarity threats can arise if you have a close personal relationship with someone and
cannot be objective. Several of the fundamental principles may be threatened.
• Intimidation threats can become significant if you put yourself in a position where you could
be pressurised by physical or verbal threats, or if there is an implied threat to your career or
prospects. For example, you may be bullied into doing work, which you are not competent to
perform. Any of the principles could suffer under this type of threat, (ACCA 2023).

2.3.2 Framework flowchart

The ACCA has produced the following flowchart which can be used to guide decision making
when facing an ethical dilemma at work:

13 Ethics and professionalism

 (ACCA, 2023)

Watch the video Applying the Framework to Ethical Dilemmas in the Prepare section so see an
example of how to use the questions within the framework.

2.3.3 Safeguards in more detail (ACCA, 2023)

There are the safeguards created by a country’s laws and regulations.
Then there are safeguards created by the accounting profession which are designed to ensure
that:
• All accountants work in line with the fundamental principles,
• Compliance with the fundamental principles is regulated, and
• Sanctions are imposed on those professional accountants who do not comply.
The next safeguards are the education and training required before entering the profession and
the continuing professional development (CPD) requirements after qualifying as an accountant.
This training teaches current practices and helps keep members up-to-date with accounting
standards and regulations.
Finally, there are safeguards we can create for ourselves e.g

Ethics and professionalism 14

 • Complying with continuing professional development requirements
• Keeping records of contentious issues and how the individual addressed them; using an
independent mentor
• Using the services of legal advisors and professional bodies.
When making a decision on a course of action, it is important to be able to be clear on:
• The principle or principles being threatened and the nature of the threat.
• The safeguards in place to reduce the threat to an acceptable level and allow the proposed
course of action to go ahead. If there is no existing safeguard, or one cannot be implem

3 Taking ethical decisions

As we have seen there are different ethical theories or perspectives that guide professional
practitioners as they make decisions about how to conduct themselves, including how they treat
clients, customers and colleagues, . In other words, taking an ethical stance refers to your
decision-making and the motives behind your actions.
If you tend to make decisions based on the consequences to other people this means you would
generally be considered as taking a utilitarian approach to decision-making: if asked to do
something that legal that does not violate the fundamental principles but had negative
consequences for a large number of people, you might not want to do it. For example, you may
not wish to advise a client that a loss-making division of the business should be closed, making
many workers redundant. It would violate your preferred personal ethical framework, but it would
not violate your professional ethics (ACCA, 2023).
It is important to know the difference between the two. Professional accountants should strive to
maintain objectivity by being mindful of the fact that personal values are just that – personal and
unique.
You can test out your preferred personal approach to decision-making by trying the Personal
Ethics Diagnostic test in the Apply section.

3.1 How professional ethics and personal values fit together

Having considered your own personal values and learned about IFAC’s fundamental principles,
here is how the two fit together, (ACCA, 2023):
(a) In any situation begin with local laws. The situations in which it might be ethically permissible
to break the law generally involve matters of life and death and are not likely to occur in the
professional work of accountants.
(b) Next look to the specific rules that govern the situation. For example, if you are an auditor,
you will be bound by the relevant auditing standards in your jurisdiction.
(c) Then as a professional, whether an auditor or not, you must consider the principles of your
professional body which form the basis of your professional ethics.
Professional ethics is about an obligation to the public. To become a professional - whether a
doctor, a lawyer, an engineer, or an accountant, you will have been tested to grant acceptance
into your profession. The public place their trust in you because you are a member of a trusted
professional body (ACCA, 2023).
This means that professionals owe the public a certain level of integrity and objectivity,
professional competence and due care, confidentiality, and professional behaviour. In other
words, accountants must uphold the IFAC fundamental principles simply because they are
professionals with professional ethics.

Key learning point

Remember that your own personal values and experiences are the filter through which you view
any situation. It is important for you to be aware of those filters because they could influence
your professional judgement.

15 Ethics and professionalism

 That is why this topic has exposed you to different kinds of ethical thought, so that you can
recognise your own personal ethical perspective when you exercise your professional ethics.

4 Summary of key learnings

This topic has looked at Ethics and Professionalism within the accountancy profession.
Ethics is a branch of philosophy which focuses on questions of what is right or wrong. As an
accountant there will be many occasions when making the wrong choice has serious
consequences, including corporate failure, loss of reputation, fines and even jail sentences.
There are three very broad perspectives on ethics, meaning people approach ethical questions
from different points of view, these are: good intentions, rules conformance and competence.
Different philosophical schools of thought have developed over the years that reflect differences
in which principles should guide our actions, such as duty to others, the consequences of an
action (utilitarianism), virtue theory, social contract theory, Confucian ethics, the golden rule and
the mirror test.
It is important that you are aware of your personal ethics but being a member of the accounting
profession means ‘professing’ to a higher standard of accountability.
Professional ethics are the set of rules of behaviour handed to you by a company or professional
body such as the ACCA, that all members must follow. These allow you to take a more objective
approach rather than just relying on your individual personal ethics.
The accounting profession recommends using a principles-based approach when making ethical
decisions. There are five fundamental principles:
(a) Integrity
(b) Objectivity
(c) Professional competence and due care
(d) Confidentiality
(e) Professional behaviour.
An ethical framework (consisting of a series of questions to work through when confronted with
an ethical dilemma) has been developed to help accountants apply these principles:
(a) What is the real issue here?
(b) Are the fundamental principles threatened?
(c) Is the threat significant?
(d) Are there safeguards that can eliminate the threat or reduce it to an acceptable level?
Threats to the fundamental principles can come from the following sources:
• Self-interest threats
• Self-review threats
• Advocacy threats
• Familiarity threats
• Intimidation threats
Be aware of your own personal values and experiences: they are the filter through which you view
any situation and could influence your professional judgement. In a professional situation as an
accountant, instead, you must begin with the local laws, then any specific rules, then apply the
accounting principles.

Essential reading

ACCA. 2022. What is ethics? [online] Available at: https://www.accaglobal.com/hk/en/about-

us/regulation/ethics/what-is-ethics.html [Accessed 17 Feb 2023]
Chapters 1 and 2 from Weiss. 2021. Business Ethics 7th ed. Oakland: Berrett-Koehler Publishers.
[online] Available through BPP Library using O’Reilly. [Accessed 20 Mar 2023]

Ethics and professionalism 16

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17 Ethics and professionalism