Exploring the IESBA code

Installment 1: The Five Fundamental Principles

Professional accountants are often faced with complex, real world situations that are not black and white. The newly revised International Code of Ethics for Professional Accountants (“the Code”), developed by the International Ethics Standards Board for Accountants (IESBA), sets out principles to guide behavior and help accountants uphold their responsibility to act in the public interest, even in nuanced situations.

For example…

You are Director of Accounting Policy for an international manufacturing company: The CEO has outlined a new business proposal to set up operations in an emerging market. The plan is supposed to comply with local bribery and corruption laws, but you are not sure everyone would agree with this assessment.

You are an Audit Manager: Having worked for several years on the audit of a privately held retail company, you know company management well and expect to be offered an opportunity to replace the soon-to-retire Executive Vice President of Financial Planning. You are concerned the position may not be offered to you if there are problems identified during the current year’s audit.

You are the Vice President of Finance at a cutting-edge biotech company: The marketing department has just proposed a new pricing policy for patent-protected, life-saving drugs that could be viewed as taking advantage of desperate, critically ill patients. You have been asked to provide an analysis that supports the prices the marketing executives want to charge.

Five fundamental principles help accountants navigate ethical dilemmas

While it is not possible to define every situation, the principles-based nature of the Code is relevant to all professional accountants, regardless of whether they work for a public accounting firm or in a business. Even if there is no requirement that is directly applicable to a specific situation, the five Fundamental Principles set out in the Code help the accountants find the right path—upholding their professional responsibility to act in the public interest.

Source: IFAC

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