Professional ethics and values
This domain tests the ICAP Code of Ethics, built on the IESBA conceptual framework. Questions are scenario-based: identify the threat, decide whether a safeguard suffices, and state what the member must actually do.
Core concepts
- Five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, professional behaviour.
- Conceptual framework: identify threats, evaluate their significance, then address them by eliminating the circumstance, applying safeguards, or declining the engagement.
- Five threats: self-interest, self-review, advocacy, familiarity and intimidation.
- Independence (audit): independence of mind and appearance. Certain interests are prohibited outright, not merely safeguarded - a direct financial interest in the client, a loan to or from the client (other than on normal commercial terms), a close family member in a key financial position, and contingent fees for audit work.
- Confidentiality: continues after the relationship ends; disclosure is permitted where required by law, permitted by the client, or where there is a professional duty or right to disclose.
- NOCLAR: on becoming aware of non-compliance with laws and regulations, the member discusses it with those charged with governance and considers reporting to the regulator where the matter is material and the response is inadequate; documentation is mandatory.
- Professional misconduct: handled under the Chartered Accountants Ordinance 1961 and ICAP bye-laws, through the Quality Control Review and disciplinary processes.
Worked example
An audit partner's spouse inherits shares in an audit client. Assessing the threat, the partner might propose a firewall. That fails: a direct financial interest held by the partner or an immediate family member is prohibited, so the interest must be disposed of or the partner withdrawn from the engagement. The distinction to state is prohibition versus safeguard.
Traps that cost marks
Proposing safeguards where the Code imposes a prohibition; treating confidentiality as absolute; confusing objectivity with independence; arguing that a low fee is acceptable because the client agreed to it.