Are Ethics Important For Professional Accountants?

Ethics in professional accountancy are of utmost importance. Now as the business and financial world is adopting international accounting and auditing standards, it is becoming all the more necessary to adhere to certain Code of Ethics prescribed by international and national accountancy bodies. Before arguing in favour of the topic, let’s have a look at some basic concepts:


A profession is an occupation that requires extensive training and the study and mastery of specialized knowledge, and usually has a professional association, ethical code and process of certification or licensing; for example engineering, medicine, social work, teaching, law, finance, the military, nursing and Accountancy etc. Classically there were only three professions: military, medicine and law. Each of these professions holds to a specific code of ethics and members are almost universally required to swear some form of oath to uphold those ethics, therefore ‘professing’ to a higher standard of accountability. Each of these professions also provides and requires extensive training in the meaning, value and importance of its particular oath in practice of that profession.


Practitioner of Accountancy is known as Accountant. Qualified Accountant, Accountant, Professional Accountant or Accountancy Practitioner is a legally certified accountancy and financial expert. Accountants not only work in public practice but many of them are working within private corporations, in financial industry and in various government bodies. Accountancy (profession) or accounting (methodology) is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities, lenders and other stakeholders and decision makers to make resource allocation and policy making decisions.

Like many other professions there are many professional bodies for accountants throughout the world. Some of them are legally recognized in their jurisdictions such as British qualified accountants including Chartered Certified Accountant (ACCA or FCCA), Chartered Accountant (CA, ACA or FCA), Canadian qualified accountants such as Chartered Accountant and Certified General Accountants (CA or CGA) and American qualified Accountants such as Certified Public Accountants (CPA) etc. Some other statutory and non-statutory accountancy qualifications are Certified Management Accountant (CMA), Associated Cost and Management Accountant (ACMA), Certified Financial Analyst (CFA) and Certified Fraud Examiner (CFE) etc.

In Pakistan, the Institute of Chartered Accountants of Pakistan is the sole professional and accountancy body with the right to award the Chartered Accountant designation. ICAP is the member of IFAC (International Federation of Accountants, IASB (International Accounting Standards Board), Confederation of Asian & Pacific Accountants (CAPA) and South Asian Federation of Accountants (SAFA). The members of ICAP have reached to 4,089 as of March 1, 2007 data.

Role of Professional Accountants:

Accountants are independent business advisors. Accountants can offer an extensive range of services. Accountants can be registered auditors, can set up client’s accounting systems, can be an advisor on tax planning, or a detector of frauds and embezzlements, can do budgeting and financial statement analysis, advise clients on financing decisions, provide specialist knowledge and can help maintaining an ethical environment.

After discussing the basic concepts and role of professional accountants we are in a better position to ponder on what professional ethics is and why it is important in the field of accountancy.

Definition of Ethics

The word ‘Ethics’ is derived from the Ancient Greek word ethikos; means customs and habits. A major branch of philosophy which is the study of values and customs of a person or group and covers the analysis and employment of concepts such as right and wrong, good and evil and do’s and don’ts.

Code of Ethics:

In the context of a code adopted by a profession or by a governmental organization to regulate that profession, an ethical code may be styled as a code of professional responsibility, which may dispense with difficult issues of what behaviour is ‘ethical’. A code of ethics is often a formal statement of the organization’s values on certain ethical and social issues relating to the profession and practice of the professional knowledge. This also includes the principles and procedures for specific ethical situations.

Ethics in Professional Accountancy:

The general ethical standards of society apply to people in professions such as medicine, law, nursing and accountancy etc just as much as to anyone else. However society places even higher expectations on professionals. People need to have confidence in the quality of the complex services provided by professionals

Ethics in accountancy profession are invaluable to accounting professionals and to those who rely on their services. Stakeholders including clients, credit grantors, governments, taxation authorities, employees, investors, the business and financial community etc perceive them as highly competent, reliable, objective and neutral people. Professional accountants therefore, must not only be well qualified but also possess a high degree of professional integrity. Because of these high expectations, professionals have adopted codes of ethics; also known as codes of professional conduct. These ethical codes call for their members to maintain a level of self-discipline that goes beyond the requirements of laws and regulations. Each of the major professional association for accountants has a code of ethics.

As mentioned earlier, professional accountants can be of two types. One who work in firms or independently run those firms that provide accounting, auditing and other advisory services to clients; these are called public practitioners. Others are those who are employees of organizations and may serve as internal auditors, management accountants, financial managers and financial analysts. Regardless of the role of accountants, they are adhered to code of ethics which are applied to their professional conduct although there are some special provisions for those in public practice [Reference: Code of Ethics for Professional Accountants-International Federation of Accountants (IFAC)].

International Federation of Accountants-IFAC:

The International Federation of Accountants (IFAC) is a federation of all accountancy bodies throughout the world. All the major international and national associations like ACCA, AICPA, ICMA, ICAP, IASB etc are all its member organizations. The mission of IFAC, as set out in its constitution, is “the worldwide development and enhancement of an accountancy profession with harmonized standards, able to provide services of consistently high quality in the public interest” [Ref: Code of Ethics for Professional Accountants-IFAC]. In pursuing this mission, the IFAC Board has established the IFAC Ethics Committee to develop and issue, under its own authority, high quality ethical standards and other pronouncements for professional accountants for use around the world. The Code of Ethics establishes ethical requirements for professional accountants. A member body or firm may not apply less stringent standards than those stated in this Code.

The objective of setting this code of conduct is to harmonize these standards and practices on a global perspective. Public can only trust these highly professionals when it is made mandatory to observe and follow strict regulations and codes throughout the world. A professional accountant is required to comply with the following fundamental principles mentioned in this Code of Ethics:[Ref: Section 100.4 Code of Ethics for Professional Accountants]

· Integrity: A professional accountant should be honest and straightforward in all professional and business relationship.

· Objectivity: A professional accountant should not allow bias, conflict of interest or undue influence of others to override professional or business judgments.

· Professional Competence & Due Care: A professional accountant has a continuing duty to maintain professional knowledge and skills at the level required to ensure that a client or employer receives competent professional service. A professional accountant should act diligently and in accordance with applicable technical and professional standards when providing professional services.

· Confidentiality: A professional accountant should respect the confidentiality of information acquired as a result of professional and business relationships and should not disclose nay such information to third parties without proper and specific authority unless there is a legal or professional right or duty to disclose. This information should not be used for personal advantage by professional accountant.

· Professional Behaviour: A professional accountant should comply with relevant laws and regulations and should avoid any action that discredits the profession.

Code of Ethics defined in ‘Members Handbook’ for members of ICAP Pakistan is in conformity with:

· IFAC Code of Ethics and International Auditing Standards

· International Accounting Standards

· The Institute of Chartered Accountants of Pakistan – ICAP

· Relevant legislation

[Ref: Members Handbook-ICAP]

This Code of Ethics has discussed in detail the role of Chartered Accountants in given situations. For example there are clear directives on prohibition of acceptance of gifts, long association with clients, advertising of firm’s name exceeding prescribed limits, holding client’s monies for no sound reason, disclosure of client’s records (except ones that are allowed), acceptance of fees offered by client which is less than that prevailing in market etc.

After discussing in detail the importance of ethics in accounting profession, we are to conclude the topic with this final note that accountancy as a profession is acceptable and relied upon only when ability to exercise professional judgment based on a foundation of ethics; broad but deep technical excellence and strategic awareness are exercised by a professional accountant. Only then general public can trust the integrity of this profession.

Morals Verses Ethics in the Work Place

Comparing Ethics Codes for Professional Counselors


This article looks at the differences between the codes of ethics presented by three professional counseling organizations; The American Counseling Association, The American Association of Christian Counselors and the American Association of Pastoral Counselors. The article examines the differences in the memberships of the organization, the resulting differences in the organizations’ code of ethics and discusses one missing element in each code.

General Observations on the three Codes

The codes discussed below were published by the American Counseling Association (ACA, 2005), the American Association of Christian Counselors (AACC, 2004), and the American Association of Pastoral Counselors (AAPC, 1993).

The ACA Code of Ethics is revised every 10 years and was last revised in 2005. The code has eight sections: the counseling relationship, confidentiality, professional responsibility, relationships with other professionals, evaluations, supervision and training, research, and resolving ethical issues. Counseling Today summarized the Code’s recent changes to include: increased emphasis on multiculturalism; allowing dual relationships if it includes potentially beneficial interactions; broadened acceptable use of technology in research, record keeping and counseling; more detail language on counselor impairment and transfer of clients; and finally, changes in various terms but not the meaning as an example “tests” are now referred to as “assessments”. (Highlights of ACA Code of Ethics, 2005)

The AACC code was finalized in 2004 after 10 years and 4 provisional codes. This is the longest of the three codes. The Code’s major sections are: applicability of the code, introduction and mission statement, Biblical foundation principles, ethical standards, and procedural rules. The ethical standards section is divided between the various categories of membership. The AACC Code includes the most extensive section on resolving conflicts and handling of complaints.

The AAPC is the shortest of the three codes. The code was last revised in 1993 and at this time the procedural section was separated from the Code of Ethics (Beck, 1997). The Code has seven sections: prologue, professional practices, client relationships, confidentiality, supervisee, student and employee relationships, interprofessional relationships and advertising.

Background of organizations

The ACA, AACC and AAPC, as organizations, have different charters and membership.

The ACA is an organization geared toward providing services to professional licensed counselors from all backgrounds and world-views. For example, a member could have a world-view based in atheism, Buddhism, Islam or Christianity. The ACA cannot assume any similar ethical belief or background among its member.

The AACC membership has a broad aspect in the definition of counselor and a narrow aspect in that the members are Christian. The AACC Code of Ethics encompasses sections applicable to professional licensed counselors, pastoral counselors, and lay helpers.

The AAPC has the narrowest of memberships. Full membership in AAPC requires the member have an M. Div and be ordained by a denominational organization. The denominational organization does not have to be a Christian denomination. The AAPC Code in the Prologue section specifically states the counselors are also subject to their dominations code of ethics.

Ethical Descriptors Comparison

In comparing two Christian codes from the American Association of Pastoral Counselors and the Christian Association for Psychological Studies with two secular codes from the American Counseling Association and the American Psychological Association, Beck the uses the 23 key ethical descriptors. The descriptors are from Williams Index of Ethical Code Terminology that was identified by Austin, Moline, and Williams (1990) as contained in the six codes they examined (Beck, 1997). Table 1 includes the 23 descriptors, additional terms identified and cross-references the respective codes sections to each descriptor or term.

The ACA Code contains all of the 23 ethical descriptors discussed by Beck and most of the additional terms. The only section that the ACA Code does not include is the special care sections included in the AACA Code related to substance abuse, abortion, divorce, client sexual affairs, and homosexual behaviors.

The AACC Code covers all the descriptors except for refusal of treatment, fraud, techniques and like the AAPC Code does not include the additional descriptors related to the use of technology, consultation and forensic evaluation.

The AAPC Code includes the least descriptors of the three codes. It does not include the descriptors related to measurement testing, protection, reporting colleagues, multicultural clients, groups, specific care situations, technology, consultation or forensic evaluations.

Even though the codes may include sections related to each descriptor, it does not follow that each Code provides for similar treatment of the descriptors. Two examples of descriptors that are handled differently are suicide and dual relationships.

Section A.9 of the ACA Code discusses suicide. This section leaves the decision to support or not support assisted suicide up to the counselor and states that the counselor should strive to “enable clients to exercise the highest degree of self-determination possible”. The AACC Code discusses suicide in section E1-127. The AACC Code provides counselors must refuse to “condone or advocate for active forms of euthanasia and assisted suicide”. The AAPC Code does not deal with this subject. A counselor who is a member of the ACA and AACC would be subject to conflicting Codes of Ethics in the area related to counselor actions in regards to assisted suicide.

The difference related to dual relationships are not as clear as in suicide, but the language of the three codes does seem to present of spectrum of advice on dual relationships.

The ACA Code, in 2005, was changed to lessen the restriction on dual relationships. Section A.5.d of the ACA Code now allows a dual relationship if the relationship is beneficial to the counseling relationship. The ACA wording seems indicate an acceptance of dual relationships. Section ES 1-140 to 1-146 of the AACC Code state that some dual relationships are unethical. The AACC Code does allow for an exception but states that is imperative for the counselor to document the dual relationship and to clearly document the logic for the relationship in the client notes. The language used in the AACC Code appears to be less supportive of dual relationships than the ACA Code. The AAPC Code appears to be the most restrictive in stating in Principle III E. ” We avoid dual relationship with clients… which could impair our professional judgment”. The AAPC Code does not acknowledge a positive dual relationship or provide guidance on how to determine or handle a positive dual relationship.


Hathaway (2001) raises the question of what basis is provided to support the ethics code? He goes on to observe that Christian and secular professional codes are similar on many significant points. He reasons that this is due to the fact that all mental health professionals are trained in the same or similar training programs, work in the same environment and work toward the same goals. A similar question is raised by Freeman, Engels, and Altekruse (2004) when they stated, ” those who practice…behavioral sciences regularly make moral/ethical judgments about the appropriateness or inappropriateness of particular actions, but what is the basis for such judgment? How are they justified?” The one element missing from all three models is the basis for the ethical decision-making. This leaves the practitioner without a supportive framework to reference in situations that do fall exactly into the norm or where sections of various codes conflict as noted above. The Tarasoff case as referenced by Freeman et al. (2004) is a good example of this problem. The three codes require the counselor to maintain confidentiality of information related to the counselee and counseling sessions. But how does the counselor know when a competing element of the code, such as do no harm, would outweigh another section without a sound understanding of the theoretically underpinnings of the code and/or a defined decision-making model.

As the decision making model is left up to the authors of the codes, these code will be subject to continuous redrafting to meet changing examples of ethical issues that are presented.


American Association of Christian Counselors. (2004). AACC Code of Ethics. Alexandria, Va.

American Association of Pastoral Counselors. (1993). Code of Ethics. Fairfax, Va.

American Counseling Association. (2005). ACA Code of Ethics. Alexandria, Va.

Austin, K.M., Moline, M.E., & Williams, G.T. (1990). Confronting Malpractice: Legal and Ethical Dilemmas in Psychotherapy. Newbury Park, Calif.: Sage.

Beck, J. (1997). Christian Codes, Are They Better? Christian Counseling Ethics (pp. 313-325). Downers Grove, Illinois: Intervarsity Press.

Freeman, S., Engels, D., & Altekruse, M. (2004, April). Foundation for ethical standards and codes: The role of moral philosophy and theory in ethics. Counseling and Values, 48, 163-174.

Hathaway, W. (2001). Common Sense Professional Ethics: A Christian Appraisal. Journal of Psychology and Theology, 29, 224-233.

Highlights of ACA Code of Ethics. (2005, October). Counseling Today, 1,16-17,63.

How To Build A Business Ethics Program

Recent corporate financial scandals have highlighted the importance of business ethics and legal compliance. Yet a recent National Association of Corporate Directors (NACD) survey of 280 corporate CEOs and directors found that “only one of three directors felt that they were highly effective in ensuring legal compliance”.

Ethics in Business

Most companies realize that they need to develop and implement a business ethics and compliance program.

An effective program can:

o Establish a code of conduct that reduces risk of criminal behavior

o Detect wrongdoing, foster quick investigations, minimize consequences

o Demonstrate company’s ethical/legal philosophy during an investigation

o Reduce fines if company is found guilty of wrongdoing

o Enhance company reputation and stature

Looking at the Options

But how do you build an effective program? Companies find themselves with three options to build the program:

o Develop in-house from scratch

o Hire an external consultant

o Use a pre-written manual

And most of these companies learn a few lessons – sometimes the hard way.

Making a Strong Company Policy

Developing a program from scratch can be very time consuming and costly. Also, the company might not have the knowledge or understanding of the complexity involved. But hiring an external consultant is not always a cost effective option either. So what’s left?

Developing Your Business Ethics Program

By using a pre-written template or manual, many companies have found it easier to develop their business ethics program. And to do this, they look for what a strong program needs.

A highly effective tool for creating, organizing and implementing a sound business ethics and compliance program should provide:

o Sample policies and procedures

o Step-by-step instructions for the development of a program

o A business ethics training program outline with classroom materials and a detailed session leader’s guide

o Business ethics and compliance officer position description

o Templates for employee involvement

o Sample code of conduct

Implementing Your Business Ethics Program

If the company board has committed to a strong business ethics and compliance program, the next step is to put the manual in the hands of corporate executives responsible for implementation. Used properly under advice of legal counsel, this efficient tool will yield a solid program that the board can understand, endorse, and monitor for effectiveness.

With step-by-step guidelines and accompanying examples of policies, procedures, training program, and employee survey, an effective tool provides an excellent road map for implementing an ethics and compliance initiative.

Maintaining a Culture of Ethics

Companies should make certain that their ethics compliance manual provides fully editable MS Word files with sample policies, surveys, forms and training session outlines. Also, businesses should ensure their ethics compliance system manual is fully endorsed by The National Association of Corporate Directors (NACD) as a tool to maintain a culture of integrity.