Code of Ethics Overview

Approach, scope and authority

Part A: General application of this Code
100 Introduction and fundamental principles
110 Integrity
120 Objectivity
130 Professional competence and due care
140 Confidentiality
150 Professional behaviour

Part B: Professional accountants in public practice
200 Introduction
210 Professional appointment
220 Conflicts of interest
221 Corporate finance advice
230 Second opinions
240 Fees and other types of remuneration
241 Agencies and referrals
250 Marketing professional services
260 Gifts and hospitality
270 Custody of client assets
280 Objectivity – all services
290 Independence – audit and review engagements
291 Independence – other assurance engagements

Part C: Professional accountants in business
300 Introduction
310 Potential conflicts
320 Preparation and reporting of information
330 Acting with sufficient expertise
340 Financial interests
350 Inducements

Part D: Insolvency Practitioners
400 The Practice of Insolvency


The Code sets out five fundamental principles, the spirit of
which must always be complied with. It requires members
to consider whether actions or relationships might constitute
threats to adherence to those principles and where these
are significant, requires safeguards to be implemented.
The Code includes a number of sections covering situations
that members might be likely to encounter and suggests,
or in some cases requires, specific courses of action.
For convenience, these sections have been grouped into
four parts, one covering general application to all members,
and the others dealing with situations most likely to be
encountered by members in practice, members in business
and members undertaking insolvency work.


To be straightforward and honest in all professional and
business relationships.

To not allow bias, conflict of interest or undue influence
of others to override professional or business judgements.

To maintain professional knowledge and skill at the level
required to ensure that a client or employer receives
competent professional services based on current
developments in practice, legislation and techniques and act
diligently and in accordance with applicable technical and
professional standards.

To respect the confidentiality of information acquired
as a result of professional and business relationships and,
therefore, not disclose any such information to third parties
without proper and specific authority unless there is a
legal or professional right or duty to disclose nor use the
information for the personal advantage of the professional
accountant or third parties.

To comply with relevant laws and regulations and avoid any
action that discredits the profession.


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 – the threat that a financial or other
interest will inappropriately influence the professional
accountant’s judgement or behaviour;

(b) self-review – the threat that a professional accountant
will not appropriately evaluate the results of a previous
judgement made or service performed, on which the
accountant will rely when forming a judgement as part
of providing a current service;

(c) advocacy – the threat that a professional accountant
will promote a client’s or employer’s position to the
point that the professional accountant’s objectivity
is compromised;

(d) familiarity – the threat that due to a long or close
relationship with a client or employer, a professional
accountant will be too sympathetic to their interests
or too accepting of their work; and

(e) intimidation – the threat that a professional accountant
will be deterred from acting objectively because of
actual or perceived pressures.

Where threats are significant, safeguards need to be applied,
or the action/relationship at issue should not be undertaken.
The Code discusses the types of safeguards which might
be applied.

The nature of the safeguards to be applied will vary
depending on the circumstances. In exercising professional
judgement, a professional accountant needs to consider
what a reasonable and informed third party, having
knowledge of all relevant information, including the
significance of the threat and safeguards applied, would
conclude to be unacceptable.
In a number of circumstances discussed in sections 210
to 291, 310 to 350 and 400, the Code specifies actions to
be taken.


In evaluating compliance with the fundamental principles,
a professional accountant may be required to resolve
a conflict in the application of fundamental principles.
The following factors may be relevant as part of the
resolution process:

(a) relevant facts;
(b) relevant parties;
(c) ethical issues involved;
(d) fundamental principles related to the matter in question;
(e) established internal procedures; and
( f ) alternative courses of action.

Having considered these issues, an appropriate course of
action can be determined that is consistent with the
fundamental principles identified, bearing in mind the
consequences of each possible course of action. If the matter
remains unresolved, the professional accountant should
consult with other appropriate persons for help in obtaining

It may be in the best interests of the professional accountant
to document the substance of the issue and details of any
discussions held or decisions taken, concerning that issue.
If a significant conflict cannot be resolved, a professional
accountant may wish to obtain professional advice from
ICAEW or legal advisors, and thereby obtain guidance on
ethical issues without breaching confidentiality.
If, after exhausting all relevant possibilities, the ethical
conflict remains unresolved, a professional accountant
should, where possible, refuse to remain associated with
the matter creating the conflict. The professional accountant
may determine that, in the circumstances, it is appropriate to
withdraw from the engagement team or specific assignment,
or to resign altogether from the engagement, the firm or the
employing organisation.

Michael Fagelman is bound by the Insolvency Code of Ethics when carrying out all professional work relating to an insolvency appointment.