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Practical support with ethical matters in audit-related and non-audit areas is available in a series of case studies.

Putting the ICAEW Code of Ethics into practice can be challenging, not least because of the complexity and ever-changing nature of how we live and work. As illustrative examples can help auditors to explore and understand ‘the Code’ and consider ethical dilemmas in a practical way, individuals and firms may find it useful to examine the Ethical Dilemmas Case Studies – Professional Accountants in Public Practice.

The case studies were issued in February 2022 by the Consultative Committee of Accountancy Bodies (CCAB), an umbrella group of chartered professional bodies of British qualified chartered accountants, including ICAEW (see ccab.org.uk), following a CCAB Ethics Survey during 2021. More than one in four of survey respondents reported being put under pressure to act unethically – by their own firms and by clients.

Standing firm

Verbatim responses during the CCAB survey described the types of pressures applied, for example: alteration of audit opinions; not obtaining sufficient appropriate evidence; ignoring ethical standards in relation to the provision of non-audit services; and favourable reporting on weak internal controls. The survey found that 80% spoke up to prevent being put under pressure and 65% did not carry out the unethical task they were pressured to do; although 10% did and 25% did so partially.

The CCAB case studies illustrate application of the ‘conceptual framework’ approach to resolving ethical dilemmas. This focuses on identifying, evaluating and addressing threats to compliance with the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, and threats to compliance that may result from, for example, self-interest, self-review, familiarity and long association.

Case studies

These case studies consider some audit-related ethical dilemmas, but also span a range of non-audit areas where practitioners may face ethical dilemmas:
1. Dealing with staff performance issues.
2. Improper accounting for sales.
3. Conflicting clients’ interests.
4. How much to disclose to the finance director.
5. Placing unreasonable expectations on a student.
6. Financial interest.
7. Non-compliance with laws and regulations (NOCLAR).

Each case study outlines a scenario, asks questions that this prompts for a professional accountant in practice, and lists key fundamental ethical principles to consider, considerations (such as identifying relevant facts, affected parties and who should be involved in the resolution), and suggests possible courses of action. The case studies do not assess the auditor’s responsibilities under the Financial Reporting Council’s current ethical standard, which UK auditors must also consider.

In addition to these case studies for practitioners, the CCAB has also published a selection of case studies for accountants working in business, the not-for-profit sector, as non-executive directors, and in the public sector – with the latter two both including audit-related case studies. Learn more and download these case study documents from the CCAB website.

ICAEW’s Code of Ethics is available, along with links to the Code and supporting materials.

The ICAEW Code of Ethics is based on the International Ethics Standards Board for Accountants International Code of Ethics for Professional Accountants (including International Independence Standards), which is published by the International Federation of Accountants (IFAC) on its website.

ICAEW members have access to its Ethics Advisory Service via a confidential free helpline, exempt from the duty to report professional misconduct within ICAEW. Either call +44 (0)1908 248 250 or use a live webchat facility at icaew.com/contact-us/webchat

Ethics helpsheets prepared by ICAEW’s Technical Advisory Service are available.

Audit & Beyond

This article was first featured in the October 2022 edition of Audit & Beyond.

Audit & Beyond October 2022