CHAPTER 1
OVERVIEW OF PROFESSIONAL ETHICS
Faculty of Accounting and Auditing
University of Economics and Law
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What are ethics? (Cont.)
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
Professionally accepted standards of
personal and business behavior, values and
guiding principles.
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Codes of professional ethics are often
established by professional organizations to
help guide members in performing their job
functions according to sound and consistent
ethical principles.
Morals or Ethics
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
Morals are personal philosophies on right and
wrong which, through common backgrounds, are
often shared by large numbers of people.

Ethics is an agreed outcome that identifies right
or wrong in particular circumstances by way of a
decision intended to be achieved in a good way
or intending to achieve good outcomes.
Morals or Ethics (cont.)
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Ethics are moral guidelines which govern good
behavior
So behaving ethically is doing what is morally
right
Behaving ethically in business is widely regarded
as good business practice.
Ethics and Law
An important distinction to remember is that
behaving ethically is not quite the same thing as
behaving lawfully:
 Ethics are about what is right and what is wrong
 Law is about what is lawful and what is unlawful
An ethical decision is one that is both legal and
meets the shared ethical standards of the
community.
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Code of ethics
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How do businesses ensure that its directors,
managers and employees act ethically?
Areas cover:
Corporate social responsibility
Dealings with customers and supply chain
Environmental policy & actions
Rules for personal and corporate integrity
Question 1
Does the person behave ethically?
Lottery winner
A lottery winner who decides to keep all the
winnings for themselves and not to share it with
their family
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Question 2
Does the person behave ethically?
Airline pilot case
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An airline pilot who decides to risk an emergency
landing in severe bad weather for a passenger
who is gravely ill and will die if not being treated
very soon.
Accounting as a profession
What is profession?

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High level of competence and skills in a given
area
Specialised training and maintained by continuing
professional development
Focus on intellectual or administrative skills rather
than mechanical or physical actions
Accounting as a profession (cont.)
What is professional?
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A person who has significant level of training
Shows a high level of competence and skills
Behaves in an ethical and appropriate manner
‘Four Es’ of accounting profession
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Education
Ethics
Expertise
Entrepreneurship
Interaction between
Accountancy and Society
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Professional judgment

Discuss the professional accounting capabilities
that are likely to be required in professional
judgment
Step 1: Identify and define the issue
Step 2: Gather the facts and information, and identify
the relevant literature
Step 3: Perform the analysis and identify alternative
solutions
Step 4: Make the decision
Step 5: Review and complete the documentation
13 and rationale for the conclusion
Legal frameworks, regulations and
standards for business
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International
– The International Ethics Standards Board for
Accountants (IESBA)
– The International Federation of Accountants (IFAC)
Vietnam
Decision 87/2005/QD-BTC “Moral standards for
accounting and auditing profession in Vietnam”
The International Ethics Standards
Board for Accountants (IESBA)

IESBA is an independent standard-setting
body that serves the public interest by setting
robust, internationally appropriate ethics
standards, including auditor independence
requirements, for professional accountants
worldwide. These are compiled in the Code
of Ethics for Professional Accountants
http://www.ifac.org/Ethics/
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International Federation of
Accountants (IFAC)
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An international body representing all the major
accountancy bodies across the world (Standard-setting
Boards)
Including
International Auditing and Assurance Standards Board
(IAASB)
International Ethics Standards Board for Accountants
(IESBA)
International Public Sector Accounting Standards Board
(IPASB), and
International Accounting Education Standards Board
(IAESB)].
International Federation of
Accountants (IFAC) (cont.)

Its mission is to develop the high standards of
professional accountants and enhance the quality of
services they provide.
http://www.ifac.org/
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Decision 87/2005/QD-BTC
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Being applied to all individuals and enterprises
practicing the accounting and auditing
profession.
Basic principles required:
Independence, straightforwardness,
objectiveness, professional competence,
cautiousness, confidentiality, professional
behavior and compliance with the
professional standards.
Accountants and ethics
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
Accountants’ values and attitudes flow
through everything they do professionally.

They contribute to the trust the wider
community puts in the profession and the
perception it has on it.
Businesses Ethics
Business Ethics
Business ethics are simply ethics in a business
setting. The application of ethical values to
business behaviour .

Professional Ethics
Professional ethics demands the existence of
a predetermined framework, or set of rules, to
guide the professional when making ethical
20 decision.
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3 elements of businesses ethics
Element
I
DO
BEST
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Explanation
Ethics concern an individual’s professional
responsibility to act.
Ethics concern the ‘real world’ practical actions
an individual can take. It is important to consider
how an individual acts and not always what they
do.
Ethics concern choices between different
courses of action. These may involve taking a
course of action which is less unpalatable than
another.
Professional Ethics
Four steps towards understanding professional
ethics
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Morals: Personal philosophies of right or wrong
Ethics: Where personal morals alone cannot
dominate (group decision-making)
Business ethics: Ethics applied in a known
business environment (rules to be documented)
Professional ethics: Clearly established and
documented guidelines capable of consistent
application in a range of complex professional
judgment situations.
Key reasons for
accountants to behave ethically
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
Ethical issues may be a matter of law and
regulation and accountants are expected to
apply them.

An accountant’s ethical behaviour serves to
protect the public interest
Professional accountant qualities
Five personal qualities:
1. Reliability
4. Courtesy
2. Responsibility
5. Respect
3. Timeliness
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Professional accountant qualities explanation
Principles
Reliability
Examples
Accountants consistently deliver on time what is asked
for
Responsibility Accountants take ownership on their work and be
accountable for their actions and decisions.
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Timeliness
Accountants produce works within a specified
timeframe.
Accountants should be on time for work and
appointment.
Courtesy
Accountants conduct themselves with courtesy,
consideration, and general good manners towards their
clients, colleagues and others.
Respect
Accountants develop constructive relationships to their
clients, colleagues and others, and recognise their
Professional accountant qualities
Four professional qualities:
1. Independence
2. Professional skepticism
3. Accountability
4. Social responsibility
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Question 1.1
How can accountants demonstrates
accountability?
A.
By questioning work given to them
B.
By taking responsibility for a mistake
C.
By ensuring their work is free from error
D.
By replying to an email on behalf of an
unavailable colleagues
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Question 1.2
Which three of the following allow accountants to
demonstrate the professional quality of
skepticism?
A. By keeping their mind free from distractions
B. By seeking supporting evidence before accepting
information is accurate
C. By investigating why information was given to them
D. By reviewing the work of a junior before accepting it as
correct
E. By being straightforward and honest at all times
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Question 1.3
Which of the following statements best describes
corporate responsibility?
A. The company must appear ethically in all its marketing
materials
B. The company must put the needs of the community, its
shareholders and employees at the heart of all its
decisions
C. The company develops policies on issues such as how
to support the local community and charities to ensure it
plays a positive role in its local area
D. The company must develop relationships with its
stakeholders so it can learn from them and meet their
29 needs in a more efficient and environmentally friendly way
7 Principles of public life
Principles
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Descriptive
1.Selflessness
Individual should act solely in the public interest and
not for personal gain or that of friends and family.
2. Integrity
Individuals should avoid actions which would place
them under financial or other obligations whereby the
person holding their obligation could influence their
public duties.
3. Objectivity
All choices, especially those regarding awarding
contracts, rewarding or providing benefits to others
and making public appointments must be made purely
on merit.
4.Accountability
Individuals are responsible for their own actions and
are accountable to others. They must subject
themselves to whatever scrutiny comes with their
office.
7 Principles of public life
Principles
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Descriptive
5. Openness
Individuals must be open about their decisions and
actions. Information regarding the reasons for their
decisions must be freely available. Restrictions on
information are only permitted when it is in the wider
public interest.
6. Honesty
Where individuals have private interests which relate
to their public ones, they should declare them and
seek to resolve any conflict to protect the public
interest.
7. Leadership
Individuals must promote and respect the other six
principles through leadership and example.
Question 1.5
Under which circumstance might an accountant have to
disclose confidential information give to them?
A.
When requested by a regulator
B.
When requested by a lawyer
C.
When requested by a fellow employee or client
D.
When requested by an employer
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Question 1.6
Which statement describes the principle of
objectivity that is set out by the UK government?
A.
By following this principle, an accountant minimizes
the risk of passing on incorrect information.
B.
Following this principle requires an accountant to
keep their mind free from bias.
C.
Following this principle requires an accountant to stay
technically up to date.
D.
Following this principle requires scepticism and close
attention to detail when reviewing information.
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Question 1.7
Which three of the following explain why the
principle of integrity is important?
A.
To prevent passing on misinformation
B.
To prevent bias affecting an accountant’s
work
C.
To enhance the credibility of an
accountant’s work
D. To protect the security of information
E. To ensure straightforward and honest
dealings
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Question 1.8
1. Which of the following are included in the seven
principles of public life that is set out by the UK
government?
A.
Selflessness
B.
Boldness
C.
Honesty
D.
Obedience
E.
Leadership
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Code of conduct
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
Professional bodies have duty to protect the
public interest.

To ensure members acts in the ethical manner,
most professional bodies have developed codes
of conduct to guide behaviour.
Codes of conduct (cont.)
Three elements to create an effective ethical
programme:
1. Active leadership
2. Buy-in
3. Training
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Codes of conduct (cont.)
Active leadership
Senior board member should be appointed as
‘Ethical Champion’ whose initial role is to persuade
all other senior executives to lead by example.
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Codes of conduct (cont.)
Buy-in
All staff should understand ethical codes, reflect the
ethical principles of the codes in their everyday
activities .
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Codes of conduct (cont.)
Trainings
 Trainings should be provided to ensure all
understand what is expected of them.
 Helplines provides employees with advice for
dealing with ethical problems.
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Why develop an ethical code?
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Communication
Consistency of conduct
Risk reduction
Compliance with Corporate Governance rules
Fundamental ethical principles
1.
2.
3.
4.
5.
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Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour
Example of unethical action
Principles
Examples
Integrity
Handing over work to colleague that you know contain
errors
Objectivity
Allowing personal feelings about something to cloud
your judgment
Professional
Taking on works that you are not qualified to do
competence and
due care
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Confidentiality
Leaving sensitive or confidential information where
anyone can look at it
Professional
behaviour
Cheating in professional exams
Personal development and
lifelong learning
Personal development
Development of personal qualities such as
communication skills, assertiveness, time
management and relationship building
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Personal development and
lifelong learning (cont.)
Lifelong learning
Never stop learning and be open to new ideas,
decisions, skills or behaviours
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Personal development and
lifelong learning (cont.)
What counts as development?
 Study for professional or academic qualifications
 Reading professional publications
 Research and project work
 Attending the events organised by the
professional bodies
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Chapter summary
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Humans have developed a framework of rules
to regulate behaviour
Ethics are a set of moral principles that guide
behaviour
Individuals have ethical values and beliefs about
what constitutes ‘right’ and ‘wrong’ behaviour.
Ethical values often reflects those of the
individual’s family, culture, and educational
environment they are brought up in.
Chapter summary (cont.)
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
Ethics are not the same thing as law or the rules
of religion

As an accountant, your values and attitudes flow
through everything you do professionally. They
contribute to the trust the wider community puts
in the profession and the perception it has of it.
Chapter summary (cont.)
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
Professional bodies (such as ACCA, CIMA, CPA
Australia) have a duty to protect the public
interest by developing codes of conduct to
guide the members’ behaviour
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Professional bodies’ ethical guidelines give
fundamental principles that members should
follow in their professional lives
Chapter summary (cont.)
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The personal qualities that an accountant
should demonstrate are:
–
–
–
–
–
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Reliability
Responsibility
Timeliness
Courtesy
Respect
Chapter summary (cont.)
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The professional qualities an accountant should
demonstrate are:
–
–
–
–
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Independence
Skepticism
Accountability
Social responsibility
Chapter summary (cont.)
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
Personal development is the development
of personal qualities such as communication,
assertiveness, time management, and
relationship building

Lifelong learning is the concept that an
individual never stops learning and should be
open to new ideas, decisions, skills or
behaviours
Q&A
Thank you!
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