The changes, which come into effect on 1 January 2022, incorporate the International Ethics Standards Board for Accountants (IESBA) revisions from 2018. IESBA established a project to take forward the proposal to promote within the IESBA Code the ‘role and mindset’ expected of professional accountants.

The ICAS code of ethics establishes five principles of ethics that all professional accountants should follow. These are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.

The code now includes new provisions of ‘acting in the public interest’ which emphasises the role of an accountant in society and the importance of the accountancy profession’s responsibility to act in the public interest.

It emphasises that accountants are expected to comply with the ‘spirit and not just the letter of the code’ and now includes the statement ‘complying with the Code includes giving appropriate regard to the aim and intent of the specific requirements’.

It now explains what the ‘fundamental ethics’ of ‘professional behaviour’ means within the code with it emphasising that ‘the requirement for professional accountants to behave in a manner that is consistent with the profession’s responsibility to act in the public interest in all professional activities and business relationships’.

The new code includes a revised term for ‘integrity’ that states ‘professional accountant shall comply with the principle of integrity, which requires an accountant to be straightforward and honest in all professional and business relationships’. 

It also states that integrity, for accountants, ‘involves fair dealing, truthfulness and having the strength of character to act appropriately, even when facing pressure to do otherwise or when doing so might create potential adverse personal or organisational consequences’. In particular the code stresses that accountants need to stand their ground ‘when confronted by dilemmas and difficult situations, challenging others as and when circumstances warrant, in a manner appropriate to the circumstances’.

The new material also contains revisions to ‘moral courage’ which was first introduced into the ICAS Code of Ethics in November 2017. ICAS states that ‘moral courage’ is an enabler and an ‘underpinning characteristic’ which helps accountants to comply with the ‘fundamental principles’.

The new ethics also include explicit revisions regarding the impact of technology, under ‘objectivity’ it now highlights the risk that over-reliance on technology could impair a professional accountant’s objectivity.

It states ‘a professional accountant shall comply with the principle of objectivity, which requires an accountant to exercise professional or business judgement without being compromised by bias, conflict of interest, or undue influence or undue reliance on, individuals, organisations, technology or other factors’.

It also includes material that highlights the importance of ensuring that an accountant’s awareness and understanding of relevant technical, professional, business and technology-related developments are up to date.

A new requirement has been introduced for all professional accountants to have an ‘inquiring mind’ when identifying, evaluating, and addressing threats to the fundamental principles. ICAS states that this represents the need for accountants to consider the source, relevance and sufficiency of information obtained, taking into account the nature, scope and outputs of the professional activity being undertaken and being open and alert to a need for further investigation or other action.

The code now also highlights a distinction between the requirement for all professional accountants to have an ‘inquiring mind’ from the audit term ‘professional scepticism’.

ICAS has included new material which covers the importance of accountants ‘being aware of conscious or unconscious bias when applying the conceptual framework’ with the code now including a list of examples to help accountants to recognise when bias could be a threat to their professional judgment.

New applications have also been inserted regarding ‘organisational culture’ to highlight the importance of an ethical organisational culture listing the areas in which it is most effective.

ICAS states that these new provisions are in line with the themes of ICAS’ The Power of One business ethics initiative, which highlights the importance of a culture of ‘doing the right thing’.

Finally, ICAS also includes material that highlights the importance of accounting leaders setting the appropriate ‘tone at the top’ and that they, and management, lead by example.

The revisions state that accountants at all levels need to work to embed a culture of ethics within their sphere of influence in an organisation. It also includes new provisions about the importance of speak-up mechanisms within organisations which will help allow issues to be dealt with at the earliest opportunity before they escalate.

Useful links

Croner-i Navigate provides guidance, commentary and tools for ethical standards. See our Ethics Quick Link, the Practice Management Guide – Ethics and the Navigate eCPD module Financial Ethics and Covid-19 for a selection of these resources.