Professional Ethics and Values
Ethical framework
Candidates must know the fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. Understand the conceptual framework: identify threats (self-interest, self-review, advocacy, familiarity, intimidation), evaluate their significance, and address them by eliminating the circumstance, applying safeguards, or declining the engagement. Know independence of mind and appearance, conflicts of interest, confidentiality exceptions (legal or professional duty to disclose), and the handling of gifts, hospitality and fees. Understand the role of professional bodies, codes of conduct, whistleblowing, and the public interest. Ethics questions often test the sequence: recognise the issue, identify the threat, evaluate, respond, document.
Traps to watch
- Confidentiality is not absolute; disclosure may be required by law or permitted with consent.
- Familiarity and self-review threats are common in long associations and in preparing and auditing the same figures.
- A safeguard must be proportionate; sometimes the only answer is to decline or resign.
- Objectivity can be compromised by pressure from management even without financial interest.
- Ethical codes set minimum standards; legal compliance alone is insufficient.
Worked example
A partner has audited the same client for nine years and has a close personal friendship with the finance director. This creates familiarity and self-interest threats. Safeguards include rotating the engagement partner, independent quality review, or, if threats remain significant, withdrawing from the engagement.
Rule of thumb
When facing an ethical dilemma, ask: who is affected, which principle is threatened, which threat category applies, and what response protects the public interest?