360 Degrees: Your thoughts on the revised Code of Ethics for Professional Accountants
Q. The new, revised Code of Ethics for Professional Accountants is mandatory from 1 January 2020. How will the extensive changes affect your practice and the way you interact with clients?
Andrew Azzopardi, AzzCan Financial
The changes will be a step in the right direction. Allowing clarity to the practitioner of their rights and obligations. I think it’s very important to have a framework that reminds you what your obligations are and the importance of a robust code of ethics. Recent press concerning the financial services industry royal commission highlights the importance of high standards and ethics.
It’s very easy to get lost in practice, especially if you are a sole practitioner with a small or non‑existent network. Accountants need to buy in and maintain their skills and knowledge to protect the integrity of their profession.
Rishikesh Sapkota, director, R2M Business Group
Although there are structures and substances adjustment to the fundamental principles, the code remains unchanged. However, due to the changes now, the code requirements are stringently regulatory and enforceable. As a result, in the practice, we have to strictly follow the code, and we have to perform the jobs ethically.
Due to these changes, we have to use the improved conceptual framework (analytical tool), which tells us about the foreseeable threat in an organisation and implications for the moral and ethical challenges in the practice. Furthermore, it is pertinent to use the safeguard to reduce/ eliminate the threats and expand the relative responsibilities/ obligations while interacting with the client in the job place.
The new code also requires us to maintain our professional knowledge and skill at the highest level where we can provide competent professional services to the client. In order to adhere to the new codes, we need to ask more questions to the clients and examine their records and need to verify the accuracy of information supplied by the client.
Simone Palfreyman, principal, Palfreyman Chartered Accountants
The new Code of Ethics for Professional Accountants provides a clearer explanation of how Public Accountants need to consider their ethical obligations when dealing with their clients and staff. While the five fundamental principles are unchanged, the revised code is far easier to follow and allows practitioners to obtain a better understanding of their obligations.
As my firm has always had very high ethical standards, the new code will not have a significant effect on how we interact with our clients. We have always exercised professional judgment and considered the purpose, context and audience when preparing and presenting information for our clients. The strengthened inducement provisions are consistent with our existing policies.
However, the additional guidance on identifying, evaluation and addressing threats has helped to expand our existing processes.
Sue Tayler, owner, Effective Services Bookkeeping
Since the core principals of the Code have not fundamentally changed, there will be a subtle impact to the way we interact with clients rather than a “big bang”.
A large part of the code relates to audit or assurance engagements, which are not normally a service offered by a BAS agent. What I do see changing is a more formalised way of assessing how we are applying the code’s core principals, some of which have become mandatory. As a very small bookkeeping practice, it’s often easy to make decisions without documenting the detail.
The mandatory requirements mean more time will need to be spent on documenting thought processes and conclusions. While we would consider compliance with the principals as a normal part of our job, we will now more formally give information to clients in writing and also to ensure we have improved disclaimers to any financial statements, not just compilation engagements.