This part of the code illustrates how the conceptual framework contained in Part A is to be applied by professional accountants in business.
Investors, creditors, employers and other sectors of the business community, as well as governments and the public at large, all may rely on the work of professional accountants in business. Professional accountants in business may be solely or jointly responsible for the preparation and reporting of financial and other information, which both their employing organisations and third parties may rely on. They may also be responsible for providing effective financial management and competent advice on a variety of business-related matters.
A professional accountant in business may be a salaried employee, a partner, director (whether executive or non executive), an owner manager, a volunteer or another working for one or more employing organisation. The legal form of the relationship with the employing organisation, if any, has no bearing on the ethical responsibilities incumbent on the professional accountant in business.
A professional accountant in business has a responsibility to further the legitimate aims of their employing organisation. This code does not seek to hinder a professional accountant in business from properly fulfilling that responsibility, but considers circumstances in which conflicts may be created with the absolute duty to comply with the fundamental principles.
A professional accountant in business often holds a senior position within an organisation. The more senior the position, the greater will be the ability and opportunity to influence events, practices and attitudes. A professional accountant in business is expected, therefore, to encourage an ethics-based culture in an employing organisation that emphasises the importance that senior management places on ethical behaviour.
The examples presented in the following sections are intended to illustrate how the conceptual framework is to be applied and are not intended to be, nor should they be interpreted as, an exhaustive list of all circumstances experienced by a professional accountant in business that may create threats to compliance with the principles. Consequently, it is not sufficient for a professional accountant in business merely to comply with the examples; rather, the framework should be applied to the particular circumstances faced.
Compliance with the fundamental principles may potentially be threatened by a broad range of circumstances. Many threats fall into the following categories:
(a) Self-interest
(b) Self-review
(c) Advocacy
(d) Familiarity
(e) Intimidation.
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These threats are discussed further in Part A of this code.
Examples of circumstances that may create self-interest threats for a professional accountant in business include, but are not limited to:
Circumstances that may create self-review threats include, but are not limited to, 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.
When furthering the legitimate goals and objectives of their employing organizations professional accountants in business may promote the organisation’s position, provided any statements made are neither false nor misleading. Such actions generally would not create an advocacy threat.
Examples of circumstances that may create familiarity threats include, but are not limited to:
Examples of circumstances that may create intimidation threats include, but are not limited to:
Professional accountants in business may also find that specific circumstances give rise to unique threats to compliance with one or more of the fundamental principles. Such unique threats obviously cannot be categorised. In all professional and business relationships, professional accountants in business should always be on the alert for such circumstances and threats.
Safeguards that may eliminate or reduce to an acceptable level the threats faced by professional accountants in business fall into two broad categories:
(a) safeguards created by the profession, legislation or regulation
(b) safeguards in the work environment.
Examples of safeguards created by the profession, legislation or regulation are detailed in Section 100.12 of Part A of the code.
Safeguards in the work environment include, but are not restricted to:
In circumstances where a professional accountant in business believes that unethical behaviours or actions by others will continue to occur within the employing organisation, the professional accountant in business should consider seeking legal advice. In those extreme situations where all available safeguards have been exhausted and it is not possible to reduce the threat to an acceptable level, a professional accountant in business may conclude that it is appropriate to resign from the employing organisation.
*see Definitions
