Code of Ethics for Professional Accountants of HKICPA

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Code of Ethics for Professional Accountants of HKICPA Lecturer Aries Wong B. B. A.

Code of Ethics for Professional Accountants of HKICPA Lecturer Aries Wong B. B. A. , M. Sc. , M. Phil. , CFA, CPA Email: arieswong@chuhai. edu. hk Homepage: home. chuhai. hk/~arieswong

Introduction n A professional accountant’s responsibility is not exclusively to satisfy the needs of

Introduction n A professional accountant’s responsibility is not exclusively to satisfy the needs of an individual client or employer. In acting in the public interest a professional accountant should observe and comply with the code of ethical. n Members of HKICPA who fail to comply with the Code could lose their membership. n It is not practical to establish ethical requirements that apply to all situations and circumstances. Members should therefore consider the ethical requirements as the basic principles they should follow in performing their work. n The Code is divided into four parts: q Part A: Fundamental Principles q Part B: Professional Accountants in Public Practice q Part C: Professional Accountants in Business q Part D: Additional ethical requirements on specific areas

Fundamental Principles I) Integrity II) Objectivity III) Professional Competence and Due Care IV) Confidentiality

Fundamental Principles I) Integrity II) Objectivity III) Professional Competence and Due Care IV) Confidentiality V) Professional Behaviour

Fundamental Principles I) Integrity n A professional accountant should be straightforward and honest in

Fundamental Principles I) Integrity n A professional accountant should be straightforward and honest in all professional and business relationships. n A professional accountant should not be associated with reports, returns, communications or other information where they believe that the information: q Contains a materially false or misleading statement; q Contains statements or information furnished recklessly; or q Omits or obscures information required to be included where such omission or obscurity would be misleading. II) Objectivity n A professional accountant should not allow bias, conflict of interest or undue influence of others to override professional or business judgments. n Relationships that bias or unduly influence the professional judgment of the professional accountant should be avoided.

Fundamental Principles III) Professional Competence and Due Care n The principle of professional competence

Fundamental Principles III) Professional Competence and Due Care n The principle of professional competence and due care imposes the following obligations on professional accountants: q To maintain professional knowledge and skill at the level required to ensure that clients or employers receive competent professional service; q To act diligently in accordance with applicable technical and professional standards when providing professional services. n Continuing professional development develops and maintains the capabilities that enable a professional accountant to perform competently. n A professional accountant should take steps to ensure that those working under the professional accountant’s authority in a professional capacity have appropriate training and supervision. n Where appropriate, a professional accountant should make clients, employers or other users of the professional services aware of limitations inherent in the services to avoid the misinterpretation of an expression of opinion as an assertion of fact.

Fundamental Principles IV) Confidentiality n The principle of confidentiality imposes an obligation on professional

Fundamental Principles IV) Confidentiality n The principle of confidentiality imposes an obligation on professional accountants to refrain from: q Disclosing outside the firm or employing organization confidential information acquired as a result of professional and business relationships without proper and specific authority or unless there is a legal or professional right or duty to disclose; and q Using confidential information acquired as a result of professional and business relationships to their personal advantage or the advantage of third parties. n A professional accountant should take all reasonable steps to ensure that staff under the professional accountant’s control and persons from whom advice and assistance is obtained respect the professional accountant’s duty of confidentiality. n The need to comply with the principle of confidentiality continues even after the end of relationships between a professional accountant and a client or employer.

Fundamental Principles IV) Confidentiality (Disclosure of confidential information) n The following are circumstances where

Fundamental Principles IV) Confidentiality (Disclosure of confidential information) n The following are circumstances where professional accountants are or may be required to disclose confidential information or when such disclosure may be appropriate: q Disclosure is permitted by law and is authorized by the client or the employer; q Disclosure is required by law, for example: q There is a professional duty or right to disclose, when not prohibited by law. n In deciding whether to disclose confidential information, professional accountants should consider the following points: q Whether the interests of all parties, including third parties whose interests may be affected, could be harmed if the client or employer consents to the disclosure of information by the professional accountant; q Whether all the relevant information is known and substantiated, to the extent it is practicable; q The type of communication that is expected and to whom it is addressed.

Fundamental Principles V) Professional Behaviour n The principle of professional behaviour imposes an obligation

Fundamental Principles V) Professional Behaviour n The principle of professional behaviour imposes an obligation on professional accountants to comply with relevant laws and regulations and avoid any action that may bring discredit to the profession. n This includes actions which a reasonable and informed third party, having knowledge of all relevant information, would conclude negatively affects the good reputation of the profession. n In marketing and promoting themselves and their work, professional accountants should not bring the profession into disrepute. Professional accountants should be honest and truthful and should not: q Make exaggerated claims for the services they are able to offer, the qualifications they possess, or experience they have gained; or q Make disparaging references or unsubstantiated comparisons to the work of others.

Threats n Compliance with the fundamental principles may potentially be threatened by a broad

Threats n Compliance with the fundamental principles may potentially be threatened by a broad range of circumstances. Many threats fall into the following categories: n Self-interest threats, which may occur as a result of the financial or other interests of a professional accountant or of an immediate or close family member; Self-review threats, which may occur when a previous judgment needs to be re-evaluated by the professional accountant responsible for that judgment; Advocacy threats, which may occur when a professional accountant promotes a position or opinion to the point that subsequent objectivity may be compromised; Familiarity threats, which may occur when, because of a close relationship, a professional accountant becomes too sympathetic to the interests of others; Intimidation threats, which may occur when a professional accountant may be deterred from acting objectively by threats, actual or perceived. n n

Ethical Conflict Resolution n When initiating either a formal or informal conflict resolution process,

Ethical Conflict Resolution n When initiating either a formal or informal conflict resolution process, a professional accountant should consider the following: q Relevant facts; q Ethical issues involved; q Fundamental principles related to the matter in question; q Established internal procedures; and q Alternative courses of action. n Where a matter involves a conflict with, or within, an organization, a professional accountant should also consider consulting with those charged with governance of the organization, such as the board of directors or the audit committee. n If a significant conflict cannot be resolved, a professional accountant may wish to obtain professional advice from the relevant professional body or legal advisors. n 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.

Discussion 1 (HKICPA Module B Workshop Question)

Discussion 1 (HKICPA Module B Workshop Question)

Discussion 1 cont’d (HKICPA Module B Workshop Question)

Discussion 1 cont’d (HKICPA Module B Workshop Question)

Discussion 2 (HKICPA Module B Workshop Question)

Discussion 2 (HKICPA Module B Workshop Question)

Discussion 2 (HKICPA Module B Workshop Question)

Discussion 2 (HKICPA Module B Workshop Question)