ACCA Applied Knowledge · Business and Technology

Ethical conflicts and dilemmas: formula sheet

Full chapter guide

Key formulas

Fundamental principles: Integrity, Objectivity, Professional competence and due care, Confidentiality, Professional behaviour; These are the five principles of the ACCA Code of Ethics. Name the one under threat in each scenario.
Dilemma test: Competing pressure + threatened principle = ethical conflict; If you cannot name both the pressure and the principle, you have not yet identified the dilemma.
Typical resolution route: Gather facts → identify principle → consider options → consult/escalate → document; Escalate within the organisation first, and take advice from ACCA or legal counsel where needed.
Five fundamental principles: Integrity, Objectivity, Professional competence and due care, Confidentiality, Professional behaviour; Each threat puts one or more of these at risk. Name the principle when asked what is affected.
Five categories of threat: Self-interest, Self-review, Advocacy, Familiarity, Intimidation; Memory aid: SSAFI, or think of the sentence 'Some Students Always Find Intimidation'. Use whatever helps you recall all five.
Self-interest test: Own gain or loss could influence judgement; Look for shares, fees, loans, gifts, bonuses or job security.
Self-review test: Evaluating your own (or your firm's) earlier work; Look for 'prepared and then reviewed', 'same team', 'provided the system and then audited it'.
Advocacy test: Promoting a client's or employer's position; Look for acting as spokesperson, negotiator, or promoter of shares.
Familiarity test: Close or long relationship reduces scepticism; Look for family, friendship, or a long association with the same client or person.
Intimidation test: Actual or perceived pressure to act in a certain way; Look for threats of dismissal, litigation, loss of the client, or dominant personalities.
Definition of a safeguard: Safeguard = action that eliminates a threat or reduces it to an acceptable level; If no safeguard works, decline or end the activity causing the threat.
Three sources of safeguards: Profession + Legislation and regulation + Employer; Use these three headings to structure any answer that asks for safeguards.
Resolution sequence: Facts → principles → internal procedures → escalate → consult → document → last resort (withdraw or resign); Follow this order. Do not jump to external disclosure unless the law requires it or the matter is serious.
Five fundamental principles: Integrity, Objectivity, Professional competence and due care, Confidentiality, Professional behaviour; Name which principle is at risk in each answer.
Five fundamental principles: Integrity, Objectivity, Professional competence and due care, Confidentiality, Professional behaviour; Memorise all five. Scenario answers should name the principle under threat.
Conceptual framework approach: Identify threats → Evaluate significance → Address with safeguards or eliminate → If not possible, decline or withdraw; Evaluation uses the view of a reasonable and informed third party.
Threat categories: Self-interest, Self-review, Advocacy, Familiarity, Intimidation; Match the facts in the scenario to one category.
General decision model: Facts → Issue and affected parties → Principles and rules → Options → Decide and act → Review; Wording of steps varies by source. The order of thinking is what matters.
Confidentiality principle: Do not disclose or use information gained in professional work unless a permitted exception applies; The duty continues after the relationship ends. It also covers use for personal gain.
Disclosure permitted: Permitted = client or employer consent given and no one's interests harmed; Consent is a choice, not a duty. Check that third parties are not harmed.
Disclosure required: Required = law demands it (for example court order or money laundering report); Law overrides confidentiality. This applies even without client consent.
Disclosure allowed by professional right or duty: Allowed = professional duty or right (for example a professional body inquiry, quality review, or defending yourself in legal proceedings); Disclose only what is needed and only to the right party.
Whistleblowing route: Internal report first, then external regulator if internal routes fail or the matter is serious; Protection usually depends on good faith and the right route. Rules vary by country.
Tipping off: Suspicion reported, so do not alert the person concerned; Tipping off can be an offence in its own right in many countries.

Quick revision

The five fundamental principles are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.
Integrity means being straightforward and honest in all professional and business relationships.
Objectivity means not letting bias, conflict of interest or the influence of others override your judgement.
Self-interest threat: a financial or other personal interest could influence your judgement.
Self-review threat: you must evaluate your own earlier work or judgement.
Advocacy threat: you promote a client's or employer's position so strongly that objectivity is compromised.
Familiarity threat: a close relationship makes you too sympathetic to someone's interests or too accepting of their work.
Intimidation threat: you are deterred from acting objectively by actual or feared pressure.
Safeguards either remove the threat or reduce it to an acceptable level; if neither works, decline or withdraw.
Raise concerns internally first, for example with your manager or those charged with governance, before considering outside disclosure.
Confidentiality is a duty, but it can be overridden where disclosure is legally required or permitted and in the public interest.
A whistleblower reports wrongdoing; protection depends on local law, so answer using the principle, not a specific country's rules.

Common mistakes

Treating every dilemma as a confidentiality issue. Fix: Ask what is actually at risk. Pressure to alter figures threatens integrity, not confidentiality.
Choosing loyalty to the employer over professional duty. Fix: Remember that professional accountants owe duties beyond their employer, including honesty and the public interest.
Calling self-review a self-interest threat because the accountant is 'protecting their own work'. Fix: Ask what the core issue is. If the accountant checks their own earlier work, choose self-review. Choose self-interest only when a financial or personal gain or loss is the key factor.
Choosing intimidation for any difficult client. Fix: Intimidation needs actual or feared pressure that deters objective action, such as a threat of dismissal. A friendly relationship is familiarity.
Going straight to the regulator or press Fix: Follow internal steps first unless the law requires disclosure or the matter is very serious. Confidentiality still applies.
Confusing the sources of safeguards Fix: A code set by ACCA is a profession safeguard. A code set by the company is an employer safeguard. A statute is legislation.
Treating the framework as a list of banned actions. Fix: Remember it is principles-based. Always show the threat, its significance and the safeguard.
Naming the wrong threat category. Fix: Ask what drives the pressure: personal gain is self-interest, fear of consequences is intimidation, long friendship is familiarity.
Treating confidentiality as absolute. Fix: Always check for legal requirement, consent and professional duty or right before choosing a keep-quiet answer.
Confusing confidentiality with whistleblowing. Fix: Confidentiality is the duty to keep information private. Whistleblowing is reporting wrongdoing. Law and protected routes can override confidentiality.

Exam tips

Always link the scenario to a named fundamental principle before looking at the options.
Be suspicious of options that mean going along with pressure, hiding facts or staying silent.
Be equally cautious of options that publicly expose the matter before internal steps are tried.
In multiple response questions, pick only the number of options asked for and make sure each fits the scenario.
Watch for wording like 'most appropriate' or 'first step': the order of action matters.
In objective tests, find the single trigger word before reading the options.
For multiple response questions, check the number you must select and match each option to one category only.
Do not mix up self-interest and self-review. Ask whether the issue is gain or checking own work.