Principles of Professional Ethics (Edexcel IGCSE Accounting)
Revision Note
Written by: Dan Finlay
Reviewed by: Lucy Kirkham
Principles of Professional Ethics
What are professional ethics?
The principles of professional ethics set out how people working in accounting roles must behave
The principles of professional ethics apply to all roles and functions related to accounting
Payroll
Reporting
Auditing
Bookkeeping
Accountants
Financial statements
There can be severe consequences if professional ethics are not followed
Unethical practices can damage an accountant's reputation
Businesses will refuse to hire accountants if they are unethical
There can be legal repercussions for unethical practices, such as fines or, in serious cases, imprisonment
What are the five principles of professional ethics?
There are five principles of professional ethics
Principle | Explanation | Example |
|---|---|---|
Integrity |
| An accountant cannot agree to withhold information from the financial statements so that the business looks better. |
Objectivity |
| An accountant cannot produce financial statements for a relative. |
Professional competence and due care |
| An accountant should know the most recent terminology and accounting practices. |
Confidentiality |
| An accountant cannot share information about wages with the employees of a business. |
Professional behaviour |
| An accountant must be truthful about their qualifications when advertising their services. |
What is the public interest for accountants?
Public interest refers to the external stakeholders of a business
External stakeholders should have confidence that work produced by an accountant will lead to:
accurate and reliable financial statements
information which can be compared with that of other businesses
relevant and understandable information
Financial statements are audited to check this
Examiner Tips and Tricks
Usually, a multiple-choice question is used to test your understanding of professional ethics.
You might be given a list and asked to identify which one is or is not one of the principles of professional ethics. Normally, the examiner will use the names of the accounting concepts to try and trick you. Therefore make sure you learn the difference between them.
You might also be given a statement and asked to identify which principle of professional ethics is being described.
Worked Example
Identify the principle of professional ethics being described.
"Accountants must not share private information of a business with its competitors".
A | Integrity |
B | Objectivity |
C | Confidentiality |
D | Professional competence and due care |
Answer
The correct answer is C, confidentiality.
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