Acting within the law, and behaving in accordance with these fundamental professional ethics, you may encounter situations when a further choice exists. Figure 1: Professional behaviour decision filter Once behaviour complies fully with the law and is consistent with fundamental principles of professional behaviour, further choices are still available, but the scope becomes much narrower. For example there may be a choice to do something in one way or another, such as how to communicate with someone, or whether to act immediately or delay a decision. The choices that you make at this level of the filter require you to consider your personal values and use your own individual judgement. This is where your personal ethical values come in. The figure opposite can also be presented as a simple flow chart to guide your decision-making. The decision flowchart below is a systematic way of thinking about how you act and behave at work and the sequence in which you, as a professional, should normally filter your decisions. Figure 2: Flowchart of the professional and ethical decision- making process
Transcript
Acting within the law, and behaving in accordance with these fundamental professional ethics, you may encounter situations when a further choice exists.
Figure 1: Professional behaviour decision filter
Once behaviour complies fully with the law and is consistent with fundamental principles of professional behaviour, further choices are still available, but the scope becomes much narrower. For example there may be a choice to do something in one way or another, such as how to communicate with someone, or whether to act immediately or delay a decision. The choices that you make at this level of the filter require you to consider your personal values and use your own individual judgement.
This is where your personal ethical values come in.
The figure opposite can also be presented as a simple flow chart to guide your decision-making.
The decision flowchart below is a systematic way of thinking about how you act and behave at work and the sequence in which you, as a professional, should normally filter your decisions.
Figure 2: Flowchart of the professional and ethical decision-making process
2.1 What is a professional?
There are many different definitions of a ‘professional’. Relevant factors include academic qualifications, specialist knowledge, heightened ethical standards, and others. However, a
professional is someone who has knowledge and expertise which are recognised and valued by society. Doctors, lawyers and accountants are commonly thought of as professionals.
They have trained in their fields to develop the highest levels of specialist skills and knowledge. They are trusted and respected by the public and their peers. Professionals are expected to behave at work in accordance with minimum standards, often set out in professional and ethical codes of conduct.
A professional has a duty to their employer, clients, colleagues and themselves, but should always put the public interest above all, in guiding their behaviour and decision-making at work.
Becoming a professional involves passing examinations, gaining relevant experience and updating knowledge periodically. It also involves developing the attitudes of a professional and behaving in a way that their profession demands and society expects.
Professionals are required to know what they can and cannot do, they must decide on the right course of action and they must carry out their work to the best of their ability.
The concept of professionalism is summarised by the following unattributed quote,
‘It’s not the job you do – it’s how you do the job’
Professionalism concerns how you conduct yourself, behave, are perceived by others, and whether you are technically competent at work.
The key attribute of a professional is to exhibit a sense of trustworthiness. This provides the client or employer and the public with the assurance that the professional will always perform to a consistently high standard, and do what is expected of them.
2.2 Characteristics of a Profession
Theoretical knowledge: Professionals are assumed to have extensive theoretical knowledge and skills, and the ability to apply these in practice.
Professional association: Professional bodies are intended to enhance the status of their members. They have carefully controlled entrance requirements, including work-based practical experience, and being able to demonstrate ‘good character’.
Extensive period of education: Passing a number of examinations and demonstrating a technical knowledge of their subject.
Continuous professional development (CPD): The updating and development of knowledge and skills is essential.
Licensed practitioners: Professions seek to establish a register of membership. This provides recognition for the professional, but also helps to protect the public.
Work autonomy: Professionals should retain control of their performance at work through the skills they possess, which may be unique within the organisation.
Code of professional conduct or ethics: Professional bodies usually have codes of conduct or ethics for their members, and disciplinary procedures for those who infringe the ethical code.
Self-regulation: Professional bodies usually benefit from a measure of self-regulation and independence from government although this may vary.
High status and rewards: Successful professions achieve high status, public prestige and rewards for their members.
Mobility: The skills, knowledge and authority of a professional belong to the professional, and not the organisation for which they work. Professionals are therefore occupationally mobile.
2.3 Professionalism and you as a trainee accountant
As a trainee working within a profession, you will not be able to display all of the badges of a professional. However, in order to be accepted into a professional body, you will need to be able to demonstrate professionalism, as well as gain theoretical knowledge and practical experience.
Professionalism involves the following:
Carrying out your responsibilities to the best of your ability Keeping your skills and knowledge up to date Thinking about the impact of what you do, or fail to do Behaving honestly and with integrity Meeting your deadlines Treating clients, managers, colleagues and other employees with respect
To achieve these things you should:
Study effectively and revise thoroughly for your examinations Practise what you learn at work Take pride in your work and enjoy doing something well Learn from your mistakes and continuously improve Know your limitations and act accordingly Recognise that there is always more to learn than you already know
1225
The chief magistrate of Milan required full accounts of goods carried on ships. Early Italian republics passed laws requiring that public scribes kept track of merchandise and its value.
1206 - 1227 Genghis Khan the founder and emperor, ruled the Mongolian empire.
1254 Marco Polo (trader and explorer) was born in this year. The most famous westerner to travel the silk road. His journey through Asia lasted 24 years.
1494
Italian monk Luca de Pacioli officially introduced 'double entry' bookkeeping in his 'Summa de Arithmetica' which was a compendium of mathematical knowledge.
Originally from Genoa, Italy, the explorer Christopher Columbusfirst sights Jamaica.
1581
The Collegio dei Raxonati became the world's first society of accountants. By 1669, no one was permitted to practice accounting in Venice without being a member of the college.
After circumnavigating the known world, Sir Francis Drake is knighted by Elizabeth I.
1600
The East India Company was founded. The trading company introduced invested capital and dividend distributions, creating a great need for accountability to investors and the need for formal book-keeping and accounts.
Sumo Wrestling becomes a professional sport in Japan.
William Shakespeare's The Merchant of Venice is first published.
1850
There were 264 'accountants' listed in London's directory of professionals. In 1799, there were only 11; in 1840, there were 107.
The first U.S. clipper ship to be seen at London arrives from Hong Kong after a 97-day voyage.
1848-1855 California Gold Rush.
1854
Scotland formally recognised the profession under the designation of 'chartered accountant'. The original Institute of Chartered Accountants of Scotland was formed.
Florence Nightingale, who established Nursing as a respectable career for women, leaves for the Crimean war with 38 other female nurses.
Ferdinand de Lesseps obtained a concession from Sa'id Pasha, the viceroy of Egypt, to create a company to construct a canal open to ships of all nations. The Suez Canal opened in 1867.
1880
England formally recognised the 'chartered accountant', when the Institute of Chartered Accountants in England and Wales was incorporated by Royal Charter in May 1880, following the coming together of six local societies of accountants in London, Liverpool, Manchester and Sheffield.
Building of Panama Canal, begins.
1887
The first accounting organisation in the United States was established.
In Paris the Eiffel Tower begins construction. It was completed in 1889.
UK celebrates the 50th year of the reign of Queen Victoria 1837-1901.
1897
The New York State Society of Certified Public Accountants (CPA) was formed on 28 January.
The colours of African unity – red, green, yellow – are seen on one of the oldest African flags. These colours were used for the national flag of Ethiopia in 1897.
Englishman J. J. Thomson discovers the electron as a subatomic particle, over 1,800 times smaller than a proton (in the nucleus).
1904
The Association of Certified Chartered Accountants (ACCA) was formed, which was originally known as the London Association of Accountants, and which has become one of the largest and fastest growing international professional accountancy bodies.
American Henry Ford sets a new automobile land speed record of 91.37 mph.
The Federation Internationale de Football Association, FIFA, is founded.
The third Modern Olympic Games opens in St. Louis, Missouri, United States.
The first underground line of the New York City Subway opens.
1928
The Institute of Chartered Accountants in Australia (ICAA) was constituted by Royal Charter in 1928. The ICAA now operates under a Supplemental Royal Charter (amended from time to time) granted by the Governor-General on behalf of the UK Head of State on 23 August 2000.
The second Olympic Winter Games opened in St. Moritz, Switzerland.
The first ever east-west transatlantic flight takes place from Dublin, Ireland to Greenly, Canada.
Antibiotic substance penicillin discovered by the Scotsman, Alexander Fleming.
The animated short 'Plane Crazy' is released by Disney Studios in Los Angeles, USA featuring the first appearances of the characters Mickey and Minnie Mouse.
1952
In 1952 the Commonwealth Institute of Accountants (formerly known as the Incorporated Institute of Accountants, Victoria) and the Federal Institute of Accountants, incorporated in Victoria, decided to merge and form the Australian Society of Accountants.
The Australian Society of Accountants changed its name to the Australian Society of Certified Practising Accountants in 1990 and then several years later changed its name, again, to CPA Australia.
The first passenger jet flight route between London and Johannesburg.
Sir Winston Churchill was Prime Minister of the UK.
1973
The International Accounting Standards Committee ('IASC') was formed at its inaugural meeting in London on 29 June, as a result of an agreement by accountancy bodies in Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland and the United States.
These countries constituted the Board of the IASC at that time. Subsequently (in 2001), the International Accounting Standards Board (IASB) assumed accounting standard-setting responsibilities from the IASC. The IASB now publishes its standards in a series of pronouncements called International Financial Reporting Standards (IFRS).
The first handheld commercial cellular phone call is made by Martin Cooper in New York City.
Caribbean Community and Single Market and Economy (CARICOM) inaugurated.
Concorde cuts flying time across the Atlantic in half flying at an average speed of 954 mph.
Sydney Opera House is opened.
1973
Public awareness of generally accepted accounting standards led to the formation of the independent US Financial Accounting Standards Board (FASB).
The two German Republics, the Federal Republic of Germany (West Germany) and the German Democratic Republic (East Germany), are admitted to the United Nations.
1974
In the UK, the Consultative Committee of Accountancy bodies (CCAB) was formed with six founding members:
Association of Chartered Certified Accountants (ACCA) Chartered Institute of Management Accountants (CIMA) Chartered Institute of Public Finance and Accountancy (CIPFA) Institute of Chartered Accountants in England and Wales (ICAEW) Institute of Chartered Accountants in Ireland (ICAI) Institute of Chartered Accountants of Scotland (ICAS)
Kuala Lumpur, the capital of Malaysia, was declared as a Federal Territory.
Richard Nixon becomes the first US president forced to resign after the Watergate Scandal. Worldwide inflation helps to cause dramatic increases in the cost of fuel, food and manufacturing.
End of Oil embargo crisis: Most OPEC nations end a five-month oil embargo against the United States, Europe and Japan.
1977
The International Federation of Accountants (IFAC) was established as the worldwide organisation for the accountancy profession. At that time, membership comprised 63 professional accountancy bodies in 51 countries.
IFAC's mission is to serve the public interest, by strengthening the worldwide accountancy profession and contributing to the development of strong international economies by establishing and promoting adherence to high-quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the profession's expertise is most relevant.
'Star Wars: Episode IV A New Hope' opens in cinemas and subsequently becomes the then-highest grossing film of all time.
1980
The Association of Accounting Technicians, a qualification for technical and clerical accountants, was formed.
John Lennon, an English musician and peace activist, is assassinated by Mark David Chapman in New York City.
The St. Gotthard Tunnel opens in Switzerland as the world's longest highway tunnel at 10.14 miles (16.32 km), stretching from Goschenen to Airolo.
Zimbabwe gains independence from the United Kingdom.
1982
AAT Australia was formed.
First consumer compact disc (CD) player sold in Japan.
Michael Jackson releases 'Thriller', the biggest selling album of all time.
1988
The Hong Kong Institute of Accredited Accounting Technicians (HKIAAT) was formed.
Benazir Bhutto is sworn in as Prime Minister of Pakistan, becoming the first woman to head the government of an Islam-dominated state.
1997
The Certified Accounting Technician qualification was introduced by ACCA.
2011
ACCA introduces Foundations in Accountancy.
Professionalism
2.4 The history of the accounting profession
Accounting as an activity goes back 3,000 years or more, to the ancient Egyptians. As long as trading and commerce have taken place, there has been a need to record transactions and 'keep account'.
You can view some of the main historical developments in accountancy by clicking on the dates below. Drag the yellow strip to scroll along the dates.
The following landmarks are not exhaustive, and many other professional accountancy bodies have been formed throughout the world, to educate and train accountants in their regions. Whilst they represent and support their members, some also take responsibility for regulating their members, whether subject to independent oversight (as in the UK) or not. These bodies are continuously developing and increasing their membership and creating alliances and strategic collaborative initiatives with other organisations to promote the interests of their members, or to enhance the regulatory structures in their regions.
START
1225
The chief magistrate of Milan required full accounts of goods carried on ships. Early Italian republics passed laws requiring that public scribes kept track of merchandise and its value.
1206 - 1227 Genghis Khan the founder and emperor, ruled the Mongolian empire.
1254 Marco Polo (trader and explorer) was born in this year. The most famous westerner to travel the silk road. His journey through Asia lasted 24 years.
1494
Italian monk Luca de Pacioli officially introduced 'double entry' bookkeeping in his 'Summa de Arithmetica' which was a compendium of mathematical knowledge.
Originally from Genoa, Italy, the explorer Christopher Columbusfirst sights Jamaica.
1581
The Collegio dei Raxonati became the world's first society of accountants. By 1669, no one was permitted to practice accounting in Venice without being a member of the college.
After circumnavigating the known world, Sir Francis Drake is knighted by Elizabeth I.
1600 The East India Company was founded. The trading company introduced invested capital and dividend distributions, creating a great need for accountability to investors and the need for formal book-keeping and accounts.
Sumo Wrestling becomes a professional sport in Japan.
William Shakespeare's The Merchant of Venice is first published.
1850
There were 264 'accountants' listed in London's directory of professionals. In 1799, there were only 11; in 1840, there were 107.
The first U.S. clipper ship to be seen at London arrives from Hong Kong after a 97-day voyage.
1848-1855 California Gold Rush.
1854
Scotland formally recognised the profession under the designation of 'chartered accountant'. The original Institute of Chartered Accountants of Scotland was formed.
Florence Nightingale, who established Nursing as a respectable career for women, leaves for the Crimean war with 38 other female nurses.
Ferdinand de Lesseps obtained a concession from Sa'id Pasha, the viceroy of Egypt, to create a company to construct a canal open to ships of all nations. The Suez Canal opened in 1867.
1880
England formally recognised the 'chartered accountant', when the Institute of Chartered Accountants in England and Wales was incorporated by Royal Charter in May 1880, following the coming together of six local societies of accountants in London, Liverpool, Manchester and Sheffield.
Building of Panama Canal, begins.
1887
The first accounting organisation in the United States was established.
In Paris the Eiffel Tower begins construction. It was completed in 1889.
UK celebrates the 50th year of the reign of Queen Victoria 1837-1901.
1897
The New York State Society of Certified Public Accountants (CPA) was formed on 28 January.
The colours of African unity – red, green, yellow – are seen on one of the oldest African flags. These colours were used for the national flag of Ethiopia in 1897.
Englishman J. J. Thomson discovers the electron as a subatomic particle, over 1,800 times smaller than a proton (in the nucleus).
1904
The Association of Certified Chartered Accountants (ACCA) was formed, which was originally known as the London Association of Accountants, and which has become one of the largest and fastest growing international professional accountancy bodies.
American Henry Ford sets a new automobile land speed record of 91.37 mph.
The Federation Internationale de Football Association, FIFA, is founded.
The third Modern Olympic Games opens in St. Louis, Missouri, United States.
The first underground line of the New York City Subway opens.
1928
The Institute of Chartered Accountants in Australia (ICAA) was constituted by Royal Charter in 1928. The ICAA now operates under a Supplemental Royal Charter (amended from time to time) granted by the Governor-General on behalf of the UK Head of State on 23 August 2000.
The second Olympic Winter Games opened in St. Moritz, Switzerland.
The first ever east-west transatlantic flight takes place from Dublin, Ireland to Greenly, Canada.
Antibiotic substance penicillin discovered by the Scotsman, Alexander Fleming.
The animated short 'Plane Crazy' is released by Disney Studios in Los Angeles, USA featuring the first appearances of the characters Mickey and Minnie Mouse.
.
1952
In 1952 the Commonwealth Institute of Accountants (formerly known as the Incorporated Institute of Accountants, Victoria) and the Federal Institute of Accountants, incorporated in Victoria, decided to merge and form the Australian Society of Accountants.
The Australian Society of Accountants changed its name to the Australian Society of Certified Practising Accountants in 1990 and then several years later changed its name, again, to CPA Australia.
The first passenger jet flight route between London and Johannesburg.
Sir Winston Churchill was Prime Minister of the UK.
1973
The International Accounting Standards Committee ('IASC') was formed at its inaugural meeting in London on 29 June, as a result of an agreement by accountancy bodies in Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, the United Kingdom and Ireland and the United States.
These countries constituted the Board of the IASC at that time. Subsequently (in 2001), the International Accounting Standards Board (IASB) assumed accounting standard-setting responsibilities from the IASC. The IASB now publishes its standards in a series of pronouncements called International Financial Reporting Standards (IFRS).
The first handheld commercial cellular phone call is made by Martin Cooper in New York City.
Caribbean Community and Single Market and Economy (CARICOM) inaugurated.
Concorde cuts flying time across the Atlantic in half flying at an average speed of 954 mph.
Sydney Opera House is opened.
1973
Public awareness of generally accepted accounting standards led to the formation of the independent US Financial Accounting Standards Board (FASB).
The two German Republics, the Federal Republic of Germany (West Germany) and the German Democratic Republic (East Germany), are admitted to the United Nations.
1974
In the UK, the Consultative Committee of Accountancy bodies (CCAB) was formed with six founding members:
Association of Chartered Certified Accountants (ACCA) Chartered Institute of Management Accountants (CIMA) Chartered Institute of Public Finance and Accountancy (CIPFA) Institute of Chartered Accountants in England and Wales (ICAEW) Institute of Chartered Accountants in Ireland (ICAI) Institute of Chartered Accountants of Scotland (ICAS)
Kuala Lumpur, the capital of Malaysia, was declared as a Federal Territory.
Richard Nixon becomes the first US president forced to resign after the Watergate Scandal. Worldwide inflation helps to cause dramatic increases in the cost of fuel, food and manufacturing.
End of Oil embargo crisis: Most OPEC nations end a five-month oil embargo against the United States, Europe and Japan.
1977
The International Federation of Accountants (IFAC) was established as the worldwide organisation for the accountancy profession. At that time, membership comprised 63 professional accountancy bodies in 51 countries.
IFAC's mission is to serve the public interest, by strengthening the worldwide accountancy profession and contributing to the development of strong international economies by establishing and promoting adherence to high-quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the profession's expertise is most relevant.
'Star Wars: Episode IV A New Hope' opens in cinemas and subsequently becomes the then-highest grossing film of all time.
1980
The Association of Accounting Technicians, a qualification for technical and clerical accountants, was formed.
John Lennon, an English musician and peace activist, is assassinated by Mark David Chapman in New York City.
The St. Gotthard Tunnel opens in Switzerland as the world's longest highway tunnel at 10.14 miles (16.32 km), stretching from Goschenen to Airolo.
Zimbabwe gains independence from the United Kingdom.
1982
AAT Australia was formed.
First consumer compact disc (CD) player sold in Japan.
Michael Jackson releases 'Thriller', the biggest selling album of all time.
1988
The Hong Kong Institute of Accredited Accounting Technicians (HKIAAT) was formed.
Benazir Bhutto is sworn in as Prime Minister of Pakistan, becoming the first woman to head the government of an Islam-dominated state.
1997
The Certified Accounting Technician qualification was introduced by ACCA.
2011
ACCA introduces Foundations in Accountancy.
2.5 The accountancy profession today
Globally the accountancy profession continues to flourish with more people training to become accountants.
The development and growth in popularity of accounting as a profession continues today, despite its reputation being damaged by the corporate scandals of the early part of the 21st century. With the demise of companies like Enron, Worldcom, Parmalat and more recently Lehman Brothers, the role of accountants in providing a 'true and fair' view of the performance and position of these companies has often been brought into question.
The profession has had to become even more vigilant and responsible for the behaviour and reputation of its members. Through its education and training programmes, it has had to ensure that professional accountants develop a greater ethical and responsible attitude to their work. ACCA and other professional bodies recognise their members' duty to act in the public interest, as well as the interests of identified stakeholders.
2.6 Acting in the public interest
Accountants, like other professionals, must 'act in the public interest'. 'Acting in the Public interest’ is a difficult phrase to define exactly.
The public is everyone who is affected or could potentially be affected by the work or shortcomings of accountants and auditors, including third party institutions.
The interest is the potential impact of accountants’ work on the public, whether that be beneficial or harmful.
What actions are the public interested in as far as accountancy is concerned?
For the purposes of this module we will assume that the:
Financial transactions are being recorded accurately and completely Financial statements and reports portraying a true and fair view of the financial position
and performance of an organisation Performance and financial positions of organisations are being reliably and objectively
compared for the purpose of making investment decisions Fraud, theft and error is kept to a minimum
In order to achieve a high level of confidence, the public perception should be that accountants / auditors are:
Qualified and trained to consistently high standards Maintaining a high level of technical knowledge and competence Acting diligently Behaving with integrity and objectivity, and are ethical Subject to independent regulation
