Consultation on guidance on aspects of the ICAEW code of ethics

Public interest responsibility of accountants; identifying and managing conflicts; and determining the basis of charging fees.

The collapse of the MG Rover car company in 2005 led to an enquiry by the Financial Reporting Council (FRC) into the actions of the company’s auditors and accounting advisors.  This resulted ultimately in a disciplinary charge being levied by the FRC against an ICAEW member firm in respect of certain corporate finance transactions in 2001. The charges involved failure to consider the public interest, and failure to safeguard against threats to ethical behaviour resulting from conflicts of interest and the fees charged.

The appeal process, completed in early 2015, resulted in many of the charges being overturned, but the FRC tribunal reports raised questions about the clarity of some aspects of what is now the ICAEW code of ethics.

ICAEW’s Ethics Standards Committee accordingly issued for comment, three draft guidance notes for members. These were prepared on the basis that the issues raised by the MG Rover case do not require changes to the Code of Ethics itself, but that there are a number of aspects where guidance on the requirements of the Code could usefully be given for the avoidance of doubt.

ICAEW considered the responses to the consultation in preparing the final guidance, which was issued in March 2017.