CAPITULO 3. PRESCRIPCION
1. Plazo de Prescripción en las Multas Administrativas
(a) As ethical codes cannot include all circumstances and dilemmas, accountants need a very good understanding of the underlying principles.
(b) International codes such as the IESBA Code cannot fully capture regional variations in beliefs and practice.
(c) The illustrative examples can be interpreted mistakenly as rules to follow in all similar circumstances.
(d) Principles based codes can be difficult to enforce legally, unless the breach of the code is blatant. Most are therefore voluntary and perhaps therefore less effective.
Section summary
The CIMA Code is a principles based framework. There are advantages and disadvantages of a principles based framework over a system of rules.
4 Fundamental principles
5/10, 11/10, 5/11, 9/11,
11/11, 3/12, 5/12
Introduction
This section explains the fundamental principles in the CIMA Code, threats to those principles and the safeguards which can be applied to counteract those threats.
4.1 CIMA fundamental principles of professional ethics 5/10, 11/10,
5/11, 9/11,
11/11, 3/12, 5/12
CIMA’s ethical guidelines are available at www.cimaglobal.com. Ensure you read them,
especially Section 320 and Part B of the 2010 Code as these are specifically referred to in
your syllabus. (Note that the syllabus refers to Section 220 and Part C of the Code,however,
the recent revision of the Code has reordered the sections so they are now Section 320 and Part B respectively).
CIMA’s Code of ethics for professional accountants was last revised in October 2010 and is based on IESBA’s Code of ethics for professional accountants. It sets out the five fundamental principles of professional ethics and provides a conceptual framework for applying those principles.
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3: Ethics PART A REGULATION AND ETHICS OF FINANCIAL REPORTINGCIMA members must not only know the fundamental principles, but also apply them in their everyday work. There are serious consequences for failing to follow them, quite apart from the unacceptability of failure. Whenever a complaint is made against a member, failure to follow the contents of the
fundamental principles will be taken into account when a decision is made as to whether a prima facie case exists of professional misconduct. The code reflects the standards CIMA expects from both its members and students.
The five fundamental principles are summarised in the table below.
Fundamental principles
Integrity A professional accountant should be straightforward and honest in all professional and business relationships.
Objectivity A professional accountant should not allow bias, conflict of interest or undue influence of others to override professional or business
judgements. Professional competence and
due care
A professional accountant has a continuing duty to maintain
professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques. A professional accountant should act diligently and in accordance with applicable technical and professional standards when providing professional services.
Confidentiality A professional accountant should respect the confidentiality of information acquired as a result of professional and business relationships and should 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. Confidential information acquired as a result of professional and business relationships should not be used for the personal advantage of the professional accountant or third parties.
Professional behaviour A professional accountant should comply with relevant laws and regulations and should avoid any action that discredits the profession.
Exam alert
You may be asked to list, explain or apply the ethical principles in an exam question so make sure you know them.
4.1.1 Integrity
Integrity is the important principle of honesty and requires accountants to be straightforward in all professional and business relationships. Particular care must be taken when reporting figures and statements. Omitting key information, obscuring the facts or making calculations and decisions without due care could result in false or misleading information being produced and integrity being breached. Integrity goes further than the work an accountant produces. It also requires the accountant to act in a professional, consistent manner. The accountant must treat everyone the same rather than being friendly to some colleagues but cold to others. It also means that they should not back down over their personal or professional values just to avoid a difficult situation.
PART A REGULATION AND ETHICS OF FINANCIAL REPORTING 3: Ethics
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4.1.2 Objectivity
Objectivity is a combination of impartiality, intellectual honesty and a freedom from conflicts of interest. Accountants should act fairly and not allow prejudice or bias or the influence of others to affect their judgements. It contrasts with subjectivity which means an individual takes matters into consideration which are important to them, eg friendship and loyalty.
Objectivity is the core value that an accountant brings to their organisation. It is often difficult to separate one’s personal interest from a decision, but as accountants it is expected.
Circumstances which may leave accountants in particular risk of breaching this principle include accepting excessive hospitality or forming illicit relationships which could cause embarrassment and the risk of blackmail. Where a threat to objectivity exists, it can be reduced or eliminated by withdrawal, terminating the relationship, involving others in the process and discussing the problem with seniors.
4.1.3 Professional competence and due care
Professional competence and due care means accountants should refrain from performing any services that they cannot perform with reasonable care, knowledge, competence, diligence and a full awareness of the important issues. There is a duty to remain technically up-to-date and apply appropriate technical and professional standards when providing professional services.
Where others perform work on the accountant's behalf, the accountant must ensure that such staff also have adequate experience, qualification and are supervised. Limitations and problems found should be disclosed to those to whom the accountant is reporting. Fact and opinion should be clearly identified to avoid misunderstandings.
4.1.4 Confidentiality
Accountants have a duty to safeguard the security of information in their possession unless there is a legal or professional right or duty to disclose. Also this means not using information obtained in the course of work for personal advantage or for the benefit of others.
Breaches of confidentiality often occur when information is inadvertently disclosed to friends and family and where the accountant has recently changed employers. Care must be taken to keep confidential all information found in the course of performing a professional duty and where a new job is commenced, prior experience may be used in the new role, but not prior information.
CIMA's Code lists circumstances where confidential information may be disclosed. Examples include: Disclosure is permitted by law and is authorised by the client or employer.
Disclosure is required by law, such as providing evidence in legal proceedings or assisting public authorities when legal infringements have occurred.
Disclosure is permitted by a professional duty or right, such as complying with technical or ethical requirements, protecting the professional interests of an accountant in a legal action, to respond to a professional body in an investigation or to comply with a quality review.
4.1.5 Professional behaviour
Professional behaviour means, in essence, not doing anything that might bring discredit to the profession and to comply with all relevant laws and regulations. This is defined by the profession as 'actions which a reasonable and informed third party, having knowledge of all relevant information, would conclude negatively affects the good reputation of the profession.'
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3: Ethics PART A REGULATION AND ETHICS OF FINANCIAL REPORTINGSection summary
The five fundamental principles are integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
5 Threats and safeguards 5/10, 11/10, 5/11, 9/11, 11/11
Introduction
This section covers the type of threat that a professional accountant might face and the action that should be taken if such a threat arises.