Professional Codes

Limitation of Professional Codes

1. Treatment as Rules
Because they contain descriptions of situations that accountants might encounter, they can convey the (false) impression that professional ethics can be reduced to a set of rules contained in a code. This would be a mistaken impression, of course, as the need for personal integrity is also emphasised.

2. Cannot cover all circumstances
Ethical codes do not and cannot capture all ethical circumstances and dilemmas that a professional accountant will encounter in his or her career and this reinforces the need for accountants to understand the underlying ethical principles of probity, integrity, openness, transparency and fairness.

3. Regional differences
Although codes such as IFAC’s are intended to apply to an international ‘audience’, some may argue that regional variations in cultural, social and ethical norms mean that such codes cannot capture important differences in emphasis in some parts of the world. The oral ‘right’ can be prescribed in every situation.

4. Legal enforcement
Finally, professional codes of ethics are not technically enforceable in any legal manner although sanctions exist for gross breach of the code in some jurisdictions. Individual observance of ethical codes is effectively voluntary in most circumstances.




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Usefulness of Professional Codes

1 Fundamental Principles
Firstly, professional codes of ethics signal the importance, to accountants, of ethics and acting in the public interest in the professional accounting environment. They are reminded, unambiguously and in ‘black and white’ for example, that as with other professions, accounting exists to serve the public good and public support for the profession is likely to exist only as long as the public interest is supported over and above competing interests.

2. Internally expected standards
The major international codes (such as IFAC) underpin national and regional cultures with internationally expected standards that, the codes insist, supersede any national ethical nuances. The IFAC (2003) code states (in clause 4), “the accountancy profession throughout the world operates in an environment with different cultures and regulatory requirements. The basic intent of the Code, however, should always be respected.”

3. Minimum Standard
The codes prescribe minimum standards of behaviour expected in given situations and give specific examples of potentially problematic areas in accounting practice. In such situations, the codes make the preferred course of action unambiguous.

4. Building confidence in the profession
A number of codes of ethics exist for professional accountants. Prominent among these is the IFAC code. This places the public interest at the heart of the ethical conduct of accountants. The ACCA code discusses ethics from within a principles-based perspective. Other countries’ own professional accounting bodies have issued their own codes of ethics in the belief that they may better describe the ethical situations in those countries.




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