Code of Ethics for Professional Accountants

1 Revised July 2009 International Ethics Standards Board for Accountants code of Ethics for Professional Accountants 2 International Ethics Standards Board for Accountants International Federation of Accountants 545 Fifth Avenue, 14th Floor New York, New York 10017 USA This code of Ethics for Professional Accountants was prepared by the International Ethics Standards Board for Accountants ( IESBA ), an independent standard-setting body within the International Federation of Accountants (IFAC). The IESBA develops and issues in the public interest high-quality Ethics standards and other pronouncements for Professional Accountants for use around the world. It encourages member bodies to adopt high standards of Ethics for their members and promotes good ethical practices globally.

2 The IESBA also fosters international debate on ethical issues faced by Accountants . This publication may be downloaded free-of-charge from the IFAC website: The approved text is published in the English language. The mission of IFAC is to serve the public interest, strengthen the worldwide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high-quality Professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the profession s expertise is most relevant. Copyright July 2009 by the International Federation of Accountants (IFAC). All rights reserved.

3 Permission is granted to make copies of this work provided that such copies are for use in academic classrooms or for personal use and are not sold or disseminated and provided that each copy bears the following credit line: Copyright July 2009 by the International Federation of Accountants (IFAC). All rights reserved. Used with permission of IFAC. Contact for permission to reproduce, store or transmit this document. Otherwise, written permission from IFAC is required to reproduce, store or transmit, or to make other similar uses of, this document, except as permitted by law. Contact ISBN: 978-1-60815-035-9 3 code OF Ethics FOR Professional Accountants CONTENTS Page PREFACE .. 4 PART A: GENERAL APPLICATION OF THE code .

4 5 100 Introduction and Fundamental Principles .. 6 110 Integrity .. 11 120 Objectivity .. 12 130 Professional Competence and Due Care .. 13 140 Confidentiality .. 14 150 Professional Behavior .. 16 PART B: Professional Accountants IN PUBLIC PRACTICE .. 17 200 Introduction .. 18 210 Professional Appointment .. 23 220 Conflicts of Interest .. 26 230 Second Opinions .. 28 240 Fees and Other Types of Remuneration .. 29 250 Marketing Professional Services .. 31 260 Gifts and Hospitality .. 32 270 Custody of Client Assets .. 33 280 Objectivity All Services .. 34 290 Independence Audit and Review Engagements .. 35 291 Independence Other Assurance Engagements .. 84 PART C: Professional Accountants IN BUSINESS .. 111 300 Introduction.

5 112 310 Potential Conflicts .. 115 320 Preparation and Reporting of Information .. 116 330 Acting with Sufficient Expertise .. 117 340 Financial Interests .. 118 350 Inducements .. 120 DEFINITIONS .. 122 EFFECTIVE DATE .. 129 code OF Ethics FOR Professional Accountants 4 PREFACE The mission of the International Federation of Accountants (IFAC), as set out in its constitution, is to serve the public interest, continue to strengthen the accountancy profession worldwide, contribute to the development of strong international economies by establishing and promoting adherence to high-quality Professional standards, furthering the international convergence of such standards, and speaking out on public interest issues where the profession s expertise is most relevant.

6 In pursuing this mission, the IFAC Board has established the International Ethics Standards Board for Accountants to develop and issue, under its own authority, high quality ethical standards and other pronouncements for Professional Accountants for use around the world. This code of Ethics for Professional Accountants establishes ethical requirements for Professional Accountants . A member body of IFAC or firm shall not apply less stringent standards than those stated in this code . However, if a member body or firm is prohibited from complying with certain parts of this code by law or regulation, they shall comply with all other parts of this code . Some jurisdictions may have requirements and guidance that differ from those contained in this code .

7 Professional Accountants in those jurisdictions need to be aware of those differences and comply with the more stringent requirements and guidance unless prohibited by law or regulation. 5 PART A GENERAL APPLICATION OF THE code Page Section 100 Introduction and Fundamental Principles .. 6 Section 110 Integrity .. 11 Section 120 Objectivity .. 12 Section 130 Professional Competence and Due Care .. 13 Section 140 Confidentiality .. 14 Section 150 Professional Behavior .. 16 code OF Ethics FOR Professional Accountants 6 SECTION 100 Introduction and Fundamental Principles A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. Therefore, a Professional accountant s responsibility is not exclusively to satisfy the needs of an individual client or employer.

8 In acting in the public interest, a Professional accountant shall observe and comply with this code . If a Professional accountant is prohibited from complying with certain parts of this code by law or regulation, the Professional accountant shall comply with all other parts of this code . This code contains three parts. Part A establishes the fundamental principles of Professional Ethics for Professional Accountants and provides a conceptual framework that Professional Accountants shall apply to: (a) Identify threats to compliance with the fundamental principles; (b) Evaluate the significance of the threats identified; and (c) Apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable level.

9 Safeguards are necessary when the Professional accountant determines that the threats are not at a level at which a reasonable and informed third party would be likely to conclude, weighing all the specific facts and circumstances available to the Professional accountant at that time, that compliance with the fundamental principles is not compromised. A Professional accountant shall use Professional judgment in applying this conceptual framework. Parts B and C describe how the conceptual framework applies in certain situations. They provide examples of safeguards that may be appropriate to address threats to compliance with the fundamental principles. They also describe situations where safeguards are not available to address the threats, and consequently, the circumstance or relationship creating the threats shall be avoided.

10 Part B applies to Professional Accountants in public practice. Part C applies to Professional Accountants in business. Professional Accountants in public practice may also find Part C relevant to their particular circumstances. The use of the word shall in this code imposes a requirement on the Professional accountant or firm to comply with the specific provision in which shall has been used. Compliance is required unless an exception is permitted by this code . Fundamental Principles A Professional accountant shall comply with the following fundamental principles: (a) Integrity to be straightforward and honest in all Professional and business relationships. (b) Objectivity to not allow bias, conflict of interest or undue influence of others to override Professional or business judgments.