Code of Ethics for Professional

Accountants in the Philippines

Effective since June 30, 2008

Recommended for adoption by PICPA

Approved by BOA
 Code of Ethics for Professional
Accountants in the Philippines

Part A- General Application

Part B- Professional Accountants in Public Practice
Part C- Professional Accountants in Business
 Part A- General Application

Establishes fundamental principles of professional

ethics

provides a conceptual framework that professional

accountants shall apply
 Fundamental Principles

INTEGRITY

fair dealing and truthfulness

straightforward and honest in professional and business

relationships

OBJECTIVITY

fair, intellectually honest and free of conflicts of interest

not allow prejudice or bias, conflict of interest or influence of

others to override objectivity
 Fundamental Principles

PROFESSIONAL COMPETENCE AND DUE CARE

should not undertake an engagement which he or she cannot

reasonably expect to discharge with professional competence

strive to improve his knowledge or skills

Due Care encompasses the responsibility to perform professional

services in accordance with technical and professional standards,
carefully, thoroughly and on a timely basis

DILIGENCE- responsibility to act in accordance with the requirements

of an assignment, carefully, thoroughly and on a timely basis
 Fundamental Principles

Phases of Professional Competence:

1. Attainment of Professional Competence- formal

education, professional examination, a period of
experience

2. Maintenance of Professional Competence- being aware

of developments affecting the profession and adopting a
program to ensure quality in the performance of
professional services
 Fundamental Principles

CONFIDENTIALITY

respect the confidentiality of information acquired during the

engagement

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

not use or disclose information for personal advantage or of

a third party
 Fundamental Principles

Circumstances when Confidential information may be

disclosed:

1. Permitted by employer or client

2. Required by law (compliance with a subpoena issued by

court)

3. Professional duty or right to disclose

 Fundamental Principles

PROFESSIONAL BEHAVIOR

comply with relevant laws and regulations

refrain from any conduct which might discredit the

profession
 Ethical Conflict Resolution

Factors to consider:

1. Relevant facts

2.Ethical issues involved

3.Fundamental principles related to the matter in

question

4.Established internal procedures

5.Alternative courses of action

Conceptual Framework Approach

Identify threats to compliance with fundamental

principles

Evaluate the significance of threats identified

Apply safeguards to eliminate or reduce threats

 Threats to Compliance with the
Fundamental Principles

SELF-INTEREST THREAT

threat that a financial or other interest will

inappropriately influence the professional
accountant’s judgment or behavior
 Examples of Self-Interest Threat

1. Direct financial interest or material indirect financial interest in a

client

2. A loan or guarantee to or from a client or any of its directors or

officers

3. Undue dependence on total fees from a particular client

4. Having a close business relationship with a client

5. Potential employment with a client

6. Contingent fees relating to an engagement

 Threats to Compliance with the
Fundamental Principles
SELF-REVIEW THREAT

threat that a professional accountant will not

objectively evaluate the results of the previous
judgment made or service performed in forming a
conclusion about the subject matter of the
engagement
 Examples of Self-Review Threat

1. Member of the engagement team being, or having recently been, a director or

officer of the client

2. Member of the engagement team being, or having recently been, an employee of

the client in a position to exert direct and significant influence over the subject
matter of the engagement

3. Performing services for a client that directly affect the subject matter of the
engagement

4. Preparation of original data used to generate financial statements

5. Reporting on the operation of financial systems after being involved in their design
or implementation

6. Discovery of significant error during the re-evaluation of the work of the

professional accountant in public practice
 Threats to Compliance with the
Fundamental Principles
ADVOCACY THREAT

threat that a professional accountant will

promote a client’s or employer’s position to the
point that the professional accountant’s
objectivity is compromised
 Examples of Advocacy Threat

1. Dealing in, or being a promoter of, share or other

securities in a client

2. Acting as an advocate on behalf of client in

litigation or in resolving disputes with third parties
 Threats to Compliance with the
Fundamental Principles

FAMILIARITY THREAT

occurs when, by virtue of a close relationship

with a client, its directors, officers, employees,
a firm or member of the engagement team
becomes too sympathetic to the client’s
interests
 Examples of Familiarity Threat
1. A member of the engagement team having an immediate family
member or close family member who is a director or officer of the
client

2. A member of the engagement team having an immediate family

member or close family member who, as an employee of the
assurance client, is in a position to exert direct and significant
influence over the subject matter

3. A former partner of the firm being a director, officer of the client or an

employee in a position to exert direct and significant influence over the
subject matter

4. Long association of a senior member of the engagement team with the

client

5. Acceptance of gifts or preferential treatment, unless the value is

 Threats to Compliance with the
Fundamental Principles

INTIMIDATION THREAT

threat that the professional accountant will de

deterred from acting objectively because of
actual or perceived pressures, including
attempts to exercise undue influence over the
professional accountant
 Examples of Intimidation Threat

1. Being threatened with litigation

2. Being threatened with dismissal or replacement

over a disagreement with the application of an
accounting principle

3. Being pressured to reduce inappropriately the

extent of work performed in order to reduce fees
 Safeguards

actions or other measures that may eliminate

threats or reduce them to an acceptable level

Factors that affect the consideration of safeguard:

significance of threat

nature of the engagement

structure of the firm

 Safeguards

Two broad categories:

Safeguards created by legislation, profession or

regulation

Safeguards in the work environment

Firm-wide safeguards

Engagement specific safeguards

Safeguards within the client’s systems and procedures

 Safeguards created by
legislation, profession or
regulation
Educational, training and experience requirements

CPD

Corporate governance regulations

Professional standards and monitoring and

disciplinary processes

External review of a firm’s quality control system

 Safeguards in the work
environment
A. Firm-wide Safeguards

Leadership of the firm that stresses the importance of compliance with the
fundamental principles

Leadership of the firm that establishes the expectation that members of an

assurance team will act in the public interest

Policies and procedures to implement and monitor quality control of

engagements

Documented policies regarding identification of threats to compliance with

the fundamental principles, evaluation of significance, identification and
application of appropriate safeguards

For firms that perform assurance engagements, documented independence

policies
 Safeguards in the work
environment
A. Firm-wide Safeguards

Documented internal policies and procedures requiring compliance

with the fundamental principles

Policies and procedures that will enable the identification of interests

or relationships between the firm or members of engagement teams
and client

Policies and procedures to monitor and, if necessary, manage the

reliance on revenue received from a single client

Using different partners and engagement teams with separate

reporting lines for the provision of non-assurance services to an
assurance client
 Safeguards in the work
environment
A. Firm-wide Safeguards

Policies and procedures to prohibit individuals who are not

members of an engagement team from inappropriately
influencing the outcome of the engagement

Timely communication of a firm’s policies and procedures,

including any changes to all partners and professional staff, and
appropriate training and education on such policies and
procedures

Designating a member of senior management to be responsible

for overseeing the adequate functioning of the firm’s quality
control system
 Safeguards in the work
environment
A. Firm-wide Safeguards

Advising partners and professional staff of those assurance

clients and related entities form which they must be
independent

A disciplinary mechanism to promote compliance with

policies and procedures

Published policies and procedures to encourage and

empower staff to communicate to senior levels within the
firm any issue relating to compliance with the fundamental
principles that concerns them
 Safeguards in the work
environment
B. Engagement Specific Safeguards

Involving an additional professional accountant to review the work done or

otherwise advise as necessary

Consulting an independent third party, such as a committee of independent

directors, a professional regulatory body or another professional accountant

Discussing ethical issues with those charged with governance of the client

Disclosing to those charged with governance of the client the nature of services
provided and extent of fees charged

Involving another firm to perform or re-perform part of the engagement

Rotating a senior assurance team personnel

Safeguards within the client’s systems
and procedures

When a client appoints a firm in public practice to perform an

engagement, persons other than management ratify or approve
the appointment

The client has competent employees with experience and

seniority to make managerial decisions

The client has implemented internal procedures that ensure

objective choices in commissioning non-assurance
engagements

The client has a corporate governance structure that provides

appropriate oversight and communications regarding the firm’s
services
 Safeguards

If no safeguards are available:

eliminate the activities or interests creating the

threat or

refuse to accept or continue the engagement

Part B- Professional Accountants in
Public Practice
A professional accountant in public practice shall
not engage in any business, occupation or activity
that impairs or might impair integrity, objectivity or
good reputation of the profession and as a result
would be incompatible with the rendering of
professional services
 PROFESSIONAL APPOINTMENT

CLIENT ACCEPTANCE

consider whether acceptance would create any

threats to compliance with the fundamental
principles
Safeguards:
Possible Threats to - obtaining knowledge and
integrity and understanding of the client, its owners,
professional behavior managers, and business activities
- securing client’s commitment to
improve corporate governance
practices or internal control
PROFESSIONAL APPOINTMENT

ENGAGEMENT ACCEPTANCE

should only accept engagement that he is

competent to perform

Possible Threats to
competence and due
care
 PROFESSIONAL APPOINTMENT

Safeguards:
- Acquiring an appropriate understanding of the nature of the
client’s business, the complexity of its operations, the specific
requirements of the engagement and the purpose, nature, scope
of work to be performed
- Acquiring knowledge of relevant industries or subject matters
- Possessing or obtaining experience with relevant regulatory or
reporting requirements
- Assigning sufficient staff with the necessary competencies
- Using experts
- Agreeing on a realistic time frame for the performance of the
engagement
- Complying with quality control policies and procedures
PROFESSIONAL APPOINTMENT

CHANGES IN A PROFESSIONAL APPOINTMENT

successor auditor should determine whether

there are any reasons (professional or other) for
not accepting the engagement

Possible Threats to
professional
competence and due
care
 PROFESSIONAL APPOINTMENT

Safeguards:
- Discussing the client’s affairs fully and freely with the existing
accountant
- Asking the existing accountant to provide known information on
any facts or circumstances,that, in the existing accountant’s
opinion, the proposed accountant should be aware of before
deciding whether to accept the engagement
- When replying to requests to submit tenders, stating in the tender
that, before accepting the engagement, contact with the existing
accountant will be requested so that inquiries may be made as to
whether there are any professional or other reasons why the
appointment should not be accepted
 CONFLICTS OF INTEREST

should take reasonable steps to identify

circumstances that could pose a conflict of interest

Possible Threats to
objectivity or
confidentiality
 CONFLICTS OF INTEREST

Safeguards:
- Notifying the client of the firm’s business interest or activities that
may represent a conflict of interest and obtaining their consent to
act in such circumstances
- Notifying all known relevant parties that the professional
accountant in public practice is acting for two or more parties in
respect of a matter where their respective interests are in conflict
and obtaining their consent to so act
- Notifying the client that the professional accountant in public
practice does not act exclusively for any one client in the
provision of proposed services and obtaining their consent to so
act
 CONFLICTS OF INTEREST

Safeguards:
- The use of separate engagement teams
- Procedures to prevent access to information
- Clear guidelines for members of the engagement team on issues
of security and confidentiality
- The use of confidentiality agreements signed by employees and
partners of the firm
- Regular view of the application of safeguards by a senior
individual not involved with relevant client engagements
 SECOND OPINIONS

Possible Threats to
professional
competence and due
care

Safeguards:
- seeking client permission to contact
existing accountant
- describing limitations surrounding any
opinion in communications with the
client and providing the existing
accountant with a copy of the opinion
 FEES AND OTHER TYPES OF
REMUNERATION
PROFESSIONAL FEES

The fact that a professional accountant in Public

practice may quote a lower fee than another is
not unethical.
Safeguards:
Possible Self- interest - Making the client aware of the terms of
Threats to engagement, the basis of fees charged
professional and which services are covered by the
competence and due quoted fee
care - Assigning appropriate time and
qualified staff to the task
 FEES AND OTHER TYPES OF
REMUNERATION
CONTINGENT FEES

Factors:

1. Nature of the engagement

2. Range of possible fee amounts

3. Basis for determining fees

4. Whether outcome or result of the transaction is to be reviewed by an independent third party

Safeguards:
- Advance written agreement with the client as to the
Possible Self- interest basis of remuneration
- Disclosure to intended users of the work performed by
Threats to the professional accountant in public practice and the
OBJECTIVITY basis of remuneration
- Quality control policies and procedures
- Review by an objective thrid party
 FEES AND OTHER TYPES OF
REMUNERATION
REFERRAL FEE OR COMMISSION

Receiving fee for referring a continuing client to

another professional accountant in public
practice
Safeguards:
- Disclosing to the client any arrangements to pay for a
Possible Self- interest referral fee to another professional accountant for the
Threats to work referred.
- Disclosing to the client any arrangements to receive
OBJECTIVITY and for a referral fee to another professional accountant in
PROFESSIONAL public practice
COMPETENCE AND - Obtaining advance agreement from the client for
commission arrangements in connection with the sale
DUE CARE by a third party of goods or services to the client
MARKETING PROFESSIONAL
SERVICES

Possible Self- interest

Threats to
PROFESSIONAL
BEHAVIOR
 GIFTS AND HOSPITALITY

This covers: professional accountant in public

practice or an immediate or close family member

Possible Self-
interest/ Intimidation Safeguard:
Threats to - Do not accept such an offer!
OBJECTIVITY
 CUSTODY OF CLIENT ASSETS

Professional accountant in public practice should

not assume custody of client monies or other
assets unless permitted to do so by law, and in
compliance with any additional legal duties
imposed on a professional accountant holding such
assets
Any monies— including documents of title to money
e.g. bills of exchange, promissory notes and
documents of the title which can be converted into
money
e.g bearer bonds- received by a professional
accountant in public practice to be held or paid out on
the instruction of the person from whom or on whose
behalf they are received
 CUSTODY OF CLIENT ASSETS

Safeguard:
- Keep such assets separately from personal or
firm assets
- Use such assets only for the purpose for which
they are intended
- Be ready to account for those assets, any
Possible Self- interest income and dividends or gains generated at all
Threats to times
OBJECTIVITY - Make appropriate inquiries of the source of
such assets and consider legal and regulatory
obligations
 OBJECTIVITY- ALL SERVICES

Safeguard:
- Withdrawing from the engagement
Possible familiarity team
Threats to - Supervisory procedures
- Terminating financial or business
OBJECTIVITY relationships giving rise to the
threat
- Discussing the issue with higher
levels of management within the
firm
- Discussing the issue with those
charged with governance of the
client
 INDEPENDENCE

taking an unbiased viewpoint in the performance of

the examination and in the preparation of the report

essential element of the CPA profession

 INDEPENDENCE

INDEPENDENCE OF MIND INDEPENDENCE IN

- auditor’s perception of his APPEARANCE
own independence - public’s perception of the
- state of mind that permits professional accountant’s
the expression of independence
conclusion without being - avoidance of facts and
affected by influences that circumstances that are so
compromise professional significant that a reasonable
judgment, allowing an and informed third person
individual to act with would reasonably conclude
integrity, and exercise that the firm’s integrity,
objectivity and objectivity and professional
professional skepticism skepticism had been
compromised
 INDEPENDENCE

ENGAGEMENT PERIOD

assurance team members and the firm must

maintain independent during the assurance
engagement period

Start: Assurance team begins to perform assurance services

End: Assurance report is issued
If recurring engagement, ends with the notification
by either party that the professional relationship
has been terminated or issuance of final report, whichever comes later
 INDEPENDENCE

INDEPENDENCE REQUIREMENT

Applies to assurance services only

Members of the
firm
Firm Network Firm

FS Audit Yes Yes Yes

Non-Audit
(Not Yes Yes No
restricted)
No
Non-Audit But must not have
Yes any material financial No
(Restricted) interest in an
assurance client
INDEPENDENCE INTERPRETATIONS AND
RULINGS

FINANCIAL INTEREST

TYPE OF FINANCIAL
INTEREST
Direct- has control over the
financial interest or is able to
influence interest
Indirect- has no control over
the financial interest
MATERIALITY OF FINANCIAL
INTEREST
INDEPENDENCE INTERPRETATIONS AND
RULINGS

FINANCIAL INTEREST

Type Materiality Independence

Direct Material Impaired
Direct Immaterial Impaired
Indirect Material Impaired
Indirect Immaterial Not Impaired
INDEPENDENCE INTERPRETATIONS AND
RULINGS

LOANS AND GUARANTEES

ASSURANCE Independen
Factors to consider
CLIENT ce
• Immaterial to both the firm and
assurance client
Financial Not
• Made under normal leding
Institution Impaired
procedures, terms,
requirements

Not a Financial Not

Immaterial
Institution Impaired
INDEPENDENCE INTERPRETATIONS AND
RULINGS
CLOSE BUSINESS RELATIONSHIPS

Having a material financial interest in a joint venture with

the assurance client

Arrangements to combine one or more services or

products of the firm with one or more services or
products of the assurance client

Distribution or marketing arrangements under which the

firm acts as a distributor or marketer of the assurance
client’s products or services, or the assurance client acts
as the distributor or marketer of the products or services
of the firm
 INDEPENDENCE INTERPRETATIONS AND
RULINGS

FAMILY AND PERSONAL RELATIONSHIPS

consider the closeness of the relationship and the

role of the family member within the assurance
client
IMMEDIATE FAMILY MEMBER
includes spouse and dependent
children

a director, an officer or employee of an assurance

client who is in a position to influence the
subject matter of the assurance engagement
INDEPENDENCE INTERPRETATIONS AND
RULINGS

PAST EMPLOYMENT WITH AN ASSURANCE

CLIENT

Subject matter: FS wherein the period covered is

when a member of the engagement team has
served as a director, an officer or an employee of
an assurance client in a position to influence the
subject matter of the assurance engagement
INDEPENDENCE INTERPRETATIONS AND
RULINGS

SERVING AS AN OFFICER OR DIRECTOR ON THE

BOARD OF AN ASSURANCE CLIENT

A partner or employee of a firm or network firm

serves as an officer or a director of the board of an
assurance client= INDEPENDENCE IMPAIRED!

Serving as a honorary member on the board of an

assurance client and does not participate in the
management or operations of the assurance client
= INDEPENDENCE NOT IMPAIRED!
INDEPENDENCE INTERPRETATIONS AND
RULINGS

LONG ASSOCIATION WITH ASSURANCE CLIENTS

LEAD ENGAGEMENT PARTNER

the partner responsible for signing the report on the

consolidated FS of the audit client, and where
relevant, the partner responsible for signing the report
in respect of any entity whose FS form part of the
consolidated FS and on which a separate stand-alone
report is issued.
 INDEPENDENCE INTERPRETATIONS AND
RULINGS

LONG ASSOCIATION WITH ASSURANCE CLIENTS

Possible
Familiarity threat Safeguards:
- Rotation of personnel (In case of audit of listed
entities, lead engagement partner must be rotated at
least once every 5 years)
- Independent quality review
INDEPENDENCE INTERPRETATIONS AND
RULINGS

LONG ASSOCIATION WITH ASSURANCE CLIENTS

When audit client becomes a listed entity the length of

time the lead engagement partner has served the
audit client in that capacity should be considered in
determining when the partner should be rotated.
However, the partner may continue to serve as the
lead engagement partner, before rotating off the
engagement, for additional 2 years.
 INDEPENDENCE INTERPRETATIONS AND
RULINGS
PROVISION OF ACCOUNTING AND BOOKKEEPING
SERVICES TO ASSURANCE CLIENTS

provision of such services to an AUDIT CLIENT that is a

PUBLIC INTEREST ENTITY will impair independence

1. All listed entities

2. Any entity:
a. Defined by regulation or legislation as a public interest
entity
b. For which the audit is required by regulation or legislation
to be conducted in compliance with the same
independence requirements that apply to the audit of
listed entities
INDEPENDENCE INTERPRETATIONS AND
RULINGS
PROVISION OF ACCOUNTING AND BOOKKEEPING
SERVICES TO ASSURANCE CLIENTS

provision of such services in emergency or unusual

situations would NOT IMPAIR independence provided:

1. The client accepts responsibility for the results of the

work

2. The firm does not assume or make any managerial

decisions

3. Personnel providing the services are not members of

the assurance team
INDEPENDENCE INTERPRETATIONS AND
RULINGS

PROVISION OF TAX SERVICES TO ASSURANCE

CLIENTS

Provision of tax compliance, planning, provision of

tax opinions and assistance in the resolution of tax
disputes will NOT IMPAIR INDEPENDENCE
INDEPENDENCE INTERPRETATIONS AND
RULINGS

PROVISION OF LEGAL SERVICES TO

ASSURANCE CLIENTS
TYPE OF
INDEPENDEN
LEGAL DESCRIPTION
CE
SERVICE
Acting as an advocate in the
resolution of a dispute or
Advocacy litigation where the amount is Impaired
material to the FS of an audit
cleitn
Legal services to support
Not impaired;
an audit client in the
safeguards
Advisory execution of the
must be
transaction (contract,
INDEPENDENCE INTERPRETATIONS AND
RULINGS

PROVISION OF CORPORATE FINANCE SERVICES

TO ASSURANCE CLIENTS

Promoting or underwriting the client’s securities or

consummating business transactions in behalf of
the client will IMPAIR INDEPENDENCE
INDEPENDENCE INTERPRETATIONS AND
RULINGS

RECRUITING SENIOR MANAGEMENT

DECIDE ON HIRING INDEPENDENCE

FIRM IMPAIRED
ASSURANCE CLIENT
Note: The firm only reviews
the qualifications of the NOT IMPAIRED
applicants and provide
advice only
INDEPENDENCE INTERPRETATIONS AND
RULINGS

OVERDUE FEES

PRIOR YEAR’S
PROFESSIONAL FEES INDEPENDENCE
PAID

Before the issuance of

NOT IMPAIRED
current year’s report

After the issuance of current

IMPAIRED
year’s report
INDEPENDENCE INTERPRETATIONS AND
RULINGS

CONTINGENT FEES

Normally, impairs independence.

Fees are not considered contingent if:

Fixed by a court or other public authority

Determined based on the results of judicial

or government agency proceedings
INDEPENDENCE INTERPRETATIONS AND
RULINGS

GIFTS AND HOSPITALITY

do not accept or offer gifts or entertainment

which might reasonably be believed to have a
significant and improper influence on the
professional judgment
INDEPENDENCE INTERPRETATIONS AND
RULINGS

ACTUAL OR THREATENED LITIGATION

litigation involving the firm or member of the

engagement team and the assurance client
may create SELF-INTEREST AND
INTIMIDATION THREATS.
Part C- Professional Accountants in
Business
may be solely or jointly responsible for the preparation and
reporting of financial and other information

responsible for providing effective financial management

and competent advice on a variety of business-related
matters

may be a:

salaried employee

partner, director, owner manager or a volunteer or

another working for one or more employing organization
EXAMPLES OF SELF-INTEREST
THREAT

Financial interests, loans or guarantees

Incentive compensation arrangements

Inappropriate personal use of corporate assets

Concern over employment security

Commercial pressure from outside the employing

organization
 EXAMPLES OF SELF-REVIEW
THREAT

Business decisions or data being subject to review

and justification by the same professional
accountant in business responsible for making
those decisions or preparing that data
 EXAMPLES OF FAMILIARITY
THREAT

Being responsible for the employing organization’s

financial reporting when an immediate or close
family member employed by the entity makes
decisions that affect the entity’s financial reporting

Long association with business contacts

influencing business decisions

Acceptance of a gift or preferential treatment

unless the value is clearly insignificant
 EXAMPLES OF INTIMIDATION
THREAT

Threat of dismissal or replacement of the

professional accountant in business or a close or
immediate family member over a disagreement
about the application of an accounting principle or
the way in which financial information is to be
reported

A dominant personality attempting to influence the

decision making process
 SAFEGUARDS IN THE WORK
ENVIRONMENT

The employing organization’s systems of corporate

oversight or other oversight structures.

The employing organization’s ethics and conduct

programs

Recruitment procedures in the employing

organization emphasizing the importance of
employing high caliber competent staff

Strong internal controls

 SAFEGUARDS IN THE WORK
ENVIRONMENT

Appropriate disciplinary processes

Leadership that stresses the importance of ethical

behavior and the expectation that employees will
act in an ethical manner

Policies and procedures to implement and monitor

the quality of employee performance
 SAFEGUARDS IN THE WORK
ENVIRONMENT

Timely communication of the employing

organization’s policies and procedures

Policies and procedures to empower and

encourage employees to communicate to senior
levels within the employing organization any ethical
issues that concern them without fear

Consultation with another appropriate professional

accountant
 Safeguards

If all possible safeguards have been exhausted:

resign from the employing organization

 Potential Conflicts

Responsibilities in
employing
VS Fundamental
organization Principles
 PRESSURES THAT MAY CREATE THREATS TO
FUNDAMENTAL PRINCIPLES

Act in contrary to law or regulation

Act contrary to technical or professional standards

Facilitate unethical or illegal earnings management strategies

Lie to, or otherwise intentionally mislead others (regulators or auditors)

Issue or otherwise be associated with, a financial or non-financial report that materially

misrepresents the facts:

FS

Tax compliance

Legal compliance

Reports required by securities regulators

 Safeguards

Obtaining advice where appropriate from within the

employing organization, an independent
professional advisor or a relevant professional
body

The existence of a formal dispute resolution

process within the employing organization

Seeking legal advice

 Preparation and Reporting of
Information

prepare information and/or reports FAIRLY,

HONESTLY AND IN ACCORDANCE WITH
STANDARDS

A professional accountant who has responsibility

for the preparation or approval of the general
purpose FS shall be satisfied that those FS are
presented in accordance with the applicable
financial reporting standards
 Preparation and Reporting of
Information

Steps to maintain information for which the

professional accountant is responsible:

1. Describes clearly the true nature of business

transactions, assets or liabilities

2. Classifies and records information in a timely and

proper manner

3. Represents the facts accurately and completely in all

material respects
 ACTING WITH SUFFICIENT
EXPERTISE

professional accountant shall not intentionally

mislead an employer as to the level of expertise or
experience possessed
Threats to Professional Competence
and Due Care

Insufficient time for properly performing or

completing the relevant duties

Incomplete, restricted or otherwise inadequate

information for performing the duties properly

Insufficient experience, training and/or education

Inadequate resources for the proper performance

of the duties
 Safeguards

Obtaining additional advice or training

Ensuring that there is adequate time available for performing the

relevant duties

Obtaining assistance from someone with the necessary expertise

Consulting, where appropriate, with:

Superiors within the employing organization

Independent experts

A relevant professional body

 FINANCIAL INTERESTS

Possible threat to confidentiality and objectivity

existence of the motive and opportunity to

manipulate price sensitive information in order
to gain financially
 Inducements

Gifts

Hospitality

preferential treatment

inappropriate appeals to friendship or loyalty

 Inducements

Receiving Offers

Self-interest threats to objectivity or confidentiality

made in an attempt to unduly influence actions

Intimidation threats to objectivity or confidentiality

If an inducement was accepted and it is followed by

threats to make that offer public and damage the
reputation of either the professional accountant in
business or an immediate or close family member
 Inducements

Nature
Value Intent
 Inducements

Informing higher levels of management or those charged with

governance of the employing organization immediately when
such offers have been made

Informing third parties of the offer (professional body; employer

of the individual who made the offer)

Advising immediate or close family member of relevant threats

and safeguards where they are potentially in positions that
might result in offers of inducements

Informing higher levels of management or those charged with

governance
 Inducements

Making offers

shall not offer an inducement to improperly influence

professional judgment of a third party