Ethical decision making framework

Often the most difficult action is recognition that you have an ethical dilemma.  Once recognised or identified you can start to determine the course of action.

Does something not feel right?

Is there a potential conflict of interest?

Are you being asked to do something you are uncomfortable with?

Would you be happy to defend your actions?

Is there any reason you should not do what is being proposed or considered?

Do you have an interest in the proposed action, or will you benefit from it occurring?

Are you undertaking an audit in the UK?

Comply with the requirements of the Financial Reporting Council's Ethical Standard.

Part 4A of the ICAS Code of Ethics deals with independence in relation to audit and review engagements. However, this is redundant from a UK perspective as auditors in the UK have to comply with the FRC's Ethical Standard. There is no requirement to also comply with Part 4A of the Code.

Are you undertaking an overseas audit?

Comply with Part 4A of the Code.

Are you undertaking an independent examination of a charity?

You are specifically scoped out of the requirements of Part 4A of the Code.

Comply with the independence requirements of the respective charity regulator (section 280 of the 2020 Code).

Are you undertaking a review assurance engagement?

Comply with Part 4A of the Code (taking into account the fundamental principles)

Are you undertaking an assurance engagement which is not an audit or review engagement?

Comply with Part 4B of the Code (taking into account the fundamental principles)

A professional ethical judgement can only be made once all relevant information has been collected and analysed.

• Determine the parties involved or likely to be affected
• Read all relevant documentation, including contracts, agreements, correspondence, etc .
• Identify if there are any related or linked matters which need to be considered
• Consider the uncertainties and how some of these might be removed

The ICAS Code of Ethics (“the Code”) applies to all members of ICAS, affiliates, students, employees of a member firm or an affiliate, and member firms.

The Code establishes the five fundamental principles of professional ethics for all professional accountants:

• Integrity - to be straightforward and honest in all professional and business relationships.

• Objectivity - to exercise professional or business judgement without being compromised by:

(i) Bias;

(ii) Conflict of interest; or

(iii) Undue influence of, or undue reliance on, individuals, organisations, technology or other factors.

• Professional Competence and Due Care - to:
  (i) Attain and maintain professional knowledge and skill at the level required to ensure that a client or employing organisation receives competent professional service, based on current technical and professional standards and relevant legislation; and
  (ii) Act diligently and in accordance with applicable technical and professional standards. Confidentiality - to respect the confidentiality of information acquired as a result of professional and business relationships.

• Professional behaviour - to:
  (i) Comply with relevant laws and regulations;
  (ii) Behave in a manner consistent with the profession’s responsibility to act in the public interest in all professional activities and business relationships; and
  (iii) Avoid any conduct that the professional accountant knows or should know might discredit the profession.

Failure to follow the Code may lead to a professional accountant becoming liable to disciplinary action.

The ICAS Code of Ethics is divided into the following parts; but any of them may be useful in relevant circumstances:

• Guide to the Code – non-authoritative guidance on how the Code is structured and how to use the Code
• Part 1 - Complying with the Code, Fundamental Principles and Conceptual Framework - applicable to all Professional Accountants (Sections 100 to 199)
• Part 2 – applicable to Professional Accountants in Business (Sections 200 to 299)
• Part 3 – applicable to Professional Accountants in Public Practice (Sections 300 to 399)
• Part 4 – International Independence Standards:
• Part 4A – Independence for Audit and Review Engagements (Sections 400 to 899).
• Part 4B – Independence for Assurance Engagements Other than Audit and Review Engagements (Sections 900 to 999).
• Part 5 – applicable to Insolvency Practitioners

The use of the word “shall” in the Code imposes a requirement to comply with the specific provision in which “shall” has been used.

• Do not simply “tick the boxes” – challenge yourself from all directions.

Refer to Professional Conduct in Relation to Taxation

Refer to Part 5 of the ICAS Code of Ethics for Insolvency Practitioners.

These will be jurisdictional specific. For example, in the UK:

• Anti-money laundering legislation;
  • Refer to ICAS anti-money laundering page
  • and CCAB Anti-money Laundering, Counter Terrorist and Counter-Proliferation Financing Guidance for the Accountancy Sector 2023
• The Bribery Act 2010
  • Refer to the ICAS publication - A Common Sense Guide to the Bribery Act
• The Companies Act 2006

Look to other available authoritative accounting texts for additional guidance

Professional accountants have a responsibility to take into consideration the public interest and to maintain the reputation of the accountancy profession.  Personal self-interest must not prevail over those duties.

Consider:

• Who is your client?
• Who are the key parties who can influence your decision?
• Who will be affected by your decision? Please note that there is a need to consider all potential relevant stakeholders.
• Is your public interest at local, regional, national, or global level?
• Are there geographical or cultural issues which need to be taken into consideration?
• Is there a “social responsibility” aspect which needs to be taken into consideration?
• Is your advice or work uncorrupted by self-interest and not influenced by the interests of other parties?
• Is your decision “fair” and “balanced”?
• Could you justify your decision to others?
• Consider the “reasonable and informed third party” test (para 120.5 A6 Code of Ethics)
• How could the repercussions from your decision affect your personal or corporate “brand”?
• What could be the reputational damage caused by your involvement with your client, or the outcome of your decision?

Is there an internal reporting mechanism?

Is there a corporate Code of Ethics?

Is there approval/escalation procedures that have to be endorsed, for example, by the audit committee or board?

Is there an internal whistleblowing policy/Speak Up policy?

Are there reporting or tipping off requirements that need to be considered?

Refer to the ICAS Anti-money laundering page

and the CCAB Anti-money Laundering, Counter Terrorist and Counter-Proliferation Financing Guidance for the Accountancy Sector 2023

It may be useful to discuss your dilemma with someone that you trust. However, please ensure adherence to the ethical principle of confidentiality and consider any "tipping off" requirements that may be applicable.

Allow sufficient time to consult.

ICAS contacts:

ICAS Technical Helpdesk

Alternatively, members with a query on the Code of Ethics which is not audit/assurance related may also contact ICAS at ethicalenquiries@icas.com or by telephone on + (44) 0131 347 0271.

For ICAS’ anti-money laundering helpline, telephone +44 (0)131 347 0271 or submit a query via the ICAS Technical Helpdesk. We provide guidance on general issues concerning the regulations for example the extent of identification procedures required, and also guidance for specific instances.

We also offer the ICAS Ethics Buddy Service which enables members with an ethical dilemma, where deemed appropriate, to have confidential, informal, discussions with an experienced member in order to explore their issue and assist them in considering how they might approach their dilemma.

We have also partnered with whistleblowing charity Protect to provide members and students with access to an independent, confidential helpline. This service offers free advice regarding whistleblowing and speaking up. ICAS Protect helpline number: 0800 055 7215.

Make your decision:

• Consider and assess the range of alternative courses of action.Identify any self- interest and conflicts of interest to ensure the objectivity of the judgement. Consider the possibility of bias in the judgement process and reassess the judgement as appropriate.
• Ensure that you act ethically when making your decision and are not subject to undue pressures.
• Consider whether your proposed course of action is one which you would be happy to defend against any possible reputational risk.
• Inform the client, or relevant parties, of your course of action (being alert to any “tipping-off” requirements)

Document your decision making process including:

• An overview of the issue.
• Relevant ethical standards/Codes considered.
• The final judgement made/decision reached.
• Information known at that point in time.
• The timing of the decision.
• The alternative options considered and why the final solution was chosen and the reasons the other options were discounted.
• Any uncertainties in the decision.
• The process followed in making the decision: sources used and relied upon, discussions held and with whom and date of the decision.

Read The Power of One publications.

Do you have the necessary skills to identify an ethical dilemma? Consider the need for training.

ICAS resources:

Ethics and The Power of One.

Case Studies:

ICAS has published a series of case studies to help bring ethical problems to life:

• “Shades of Grey” (2023): 19 case studies
• “Speak up? Listen up? Whistleblow? In their own words – Insights into the ethical dilemmas of ICAS members” (2019)
• “Shades of Grey - Directors’ Dilemmas” (2016)
• “What do you do now? Ethical issues encountered by Chartered Accountants” – Dr David Molyneaux (2008): 28 case studies

Courses