THE CODE OF ETHICS FOR PROFESSIONAL • OBJECTIVITY.

A professional accountant should

ACCOUNTANTS not allow bias, conflict of interest or undue
influence of others.

What is a Code of Ethics? • PROFESSIONAL BEHAVIOR. A professional

accountant shall refrain from any conduct which
It represents a set of moral principles, rules of conduct
might bring discredit to the profession.
or values. The basic objective of the code is to assist
the members in understanding the difference
• PROFESSIONAL COMPETENCE AND DUE CARE. A
between right and wrong and in applying that
professional accountant should not undertake any
understanding to their decisions. The code if
engagement or accept an employment which he
ethics is applied when an individual has to decide from
or she cannot reasonably expect to discharge with
various alternatives regarding moral principles.
professional competence.

Why is there a need for a Code of Ethics?

A professional accountant should continually strive
to improve his knowledge and skills to ensure that
1. A distinguishing mark of the accountancy
a client or employer receives the advantage of
professions is its acceptance of the responsibility
competent professional service based on up-to-
(“public interest responsibility”) to act in the
date developments in practice, legislation, and
public interest which is the collective well-being of
techniques.
the community of the people and institutions the
CPA serves.
Due care encompasses the responsibility to
perform professional services in accordance with
2. All recognized professions have developed codes
technical and professional standards, carefully,
of professional ethics.
thoroughly and on a timely basis.

3. The profession’s attempt to achieve a number of

• INTEGRITY. A professional accountant should be
common interests and by its observance of certain
straightforward and honest in professional and
fundamental principles for that purpose.
business relationships. Integrity implies not
merely honesty but it requires being brave enough
In the Philippines, the ethical requirements being
to fight for what you believe in.
adopted are based on Code of Ethics for Professional
Accountants developed and issued by the CONCEPTUAL FRAMEWORK OF THE CODE
International Ethics Standards Boards for Accountants
(IESBA) and which are subsequently adopted by
International Federation of Accountants.

PART A. General Application

In acting in the public interest, professional

accountants shall comply with a number of
fundamental principles.

• CONFIDENTIALITY. A professional accountant THREATS

should respect the confidentiality of information
acquired during the course of performing
professional services and should not use or
disclose any such information without proper and
specific authority or unless there is a legal or
professional right or duty to disclose.
The circumstances in which the professional
accountants operate may create threats to compliance
with fundamental principles.
1. Self-interest threat is the threat that a financial
or other interest will inappropriately influence the
professional accountant’s judgment or behavior.

Exception
2. Self-review threat is the threat that a
Confidential information may be disclosed under the professional accountant will not objectively
following circumstances: evaluate the results of the previous judgment
1. Disclosure is required by law made or service performed in forming a conclusion
2. Disclosure is permitted by law and is authorized by about the subject matter of the engagement.
the client or the employing organization
3. There is a professional duty or right to disclose, when 3. Advocacy threat is the threat that a professional
not prohibited by law
accountant will promote a client’s or employer’s
 position to the point that the professional
accountant’s objectivity is compromised.

4. Familiarity threat is the threat that due to a long

or close relationship with a client, or employing
organization, a professional accountant will be too
sympathetic to their interests or too accepting of
their work.

5. Intimidation threat is the threat that the

professional accountant will be deterred from
acting objectively because of actual or perceived
pressures, including attempts to exercise undue
influence over the professional accountant.

SAFEGUARDS

A professional accountant shall evaluate any threats

to compliance with the fundamental principles. Once a
significant threat has been identified and evaluated,
appropriate safeguards should be considered an
applied as necessary.

Safeguards fall into two (2) broad categories:

1. Safeguards created by the profession, legislation,

or regulation; and

2. Safeguards in the work environment

o Firm-wide safeguards
o Engagement specific safeguards

In certain situations, no safeguards are available to

eliminate or reduce the threat to an acceptable level.
Hence, the only possible actions would be to eliminate
the activities or interest creating the threat, or to
refuse to accept or continue the engagement.