ACCA Applied Knowledge · Business and Technology

Fundamental principles of ethical behaviour: formula sheet

Full chapter guide

Key formulas

Integrity: Integrity = straightforward + honest; Not being party to false or misleading information. Think honesty and fair dealing.
Objectivity: Objectivity = no bias, no conflict of interest, no undue influence; Judgement must not be overridden by outside pressure or personal interest.
Professional competence and due care: Competence = knowledge and skill kept up to date; due care = diligent work to standards; Covers both ability and effort. Also covers CPD and acting within your competence.
Confidentiality: Do not disclose or use information without authority, unless there is a legal or professional right or duty; The duty continues after the relationship ends. Disclosure can be required, for example by law.
Professional behaviour: Comply with laws and regulations + avoid conduct that discredits the profession; Includes not exaggerating your services or qualifications and not disparaging others unfairly.
Memory aid: I O C C P; Integrity, Objectivity, Competence (and due care), Confidentiality, Professional behaviour.
Five categories of threat: Self-interest | Self-review | Advocacy | Familiarity | Intimidation; Learn all five names. Questions often ask you to pick the one that fits a scenario.
Trigger for each threat: Own gain = self-interest; own past work = self-review; taking a side = advocacy; close relationship = familiarity; pressure or fear = intimidation; Use this as a one-line test for any scenario.
Fundamental principles: Integrity, Objectivity, Professional competence and due care, Confidentiality, Professional behaviour; Threats are matched to the principle they put at risk. Objectivity is most often affected.
Conceptual framework steps: Identify threats → Evaluate significance → Apply safeguards or stop the activity; If a threat cannot be reduced to an acceptable level, you must decline or end the activity.
Two broad categories of safeguards: Profession, legislation or regulation | Employer or work environment; Questions often ask who created a safeguard. Actions you take yourself, such as seeking advice, are practical steps rather than a separate category in the Code.
Resolution sequence: Facts → Principles → Internal procedures → Consult → Document → Withdraw if unresolved; Withdrawal is a last resort, not a first reaction.
Fundamental principles: Integrity, Objectivity, Professional competence and due care, Confidentiality, Professional behaviour; Any resolution must keep these intact.
Rules-based approach: Specific rules → allowed or not allowed; Clear and easy to enforce, but cannot cover every situation and can be gamed by following the letter of a rule.
Principles-based approach: Broad principles + professional judgement → decision; Flexible and covers new situations, but less certain and open to different interpretations. ACCA's Code is principles-based.
Public interest: Duty extends beyond client or employer to society; Key reason the profession is regulated and why trust matters.
Professional scepticism: Questioning mind + critical assessment of evidence; Not assuming dishonesty; it means not accepting information without challenge.

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 professional and business relationships.
Objectivity means not letting bias, conflict of interest or the influence of others override your judgement.
Professional competence and due care means keeping your knowledge up to date and acting diligently.
Confidentiality means not disclosing information without proper authority, unless there is a legal or professional right or duty to disclose, and not using it for personal gain.
Professional behaviour means complying with relevant laws and avoiding conduct that discredits the profession.
The five threats are self-interest, self-review, advocacy, familiarity and intimidation.
Self-review: you evaluate your own earlier work. Advocacy: you promote a client's or employer's position too far.
Familiarity: a close relationship makes you too sympathetic. Intimidation: pressure stops you acting properly.
Safeguards reduce threats to an acceptable level. If they cannot, decline or end the work.
Professional scepticism is a questioning mind and a critical look at evidence.
In the exam, name the principle, then the threat, then the response.

Common mistakes

Confusing integrity with objectivity. Fix: Integrity is about your own honesty. Objectivity is about independence from bias and influence. Ask: is the problem lying, or is it pressure and conflict?
Saying confidentiality means information can never be disclosed. Fix: Disclosure is allowed with proper authority, or when there is a legal or professional right or duty to disclose. Using information for personal gain is never acceptable.
Confusing familiarity with self-review. Fix: Self-review is about judging work you or your firm did. Familiarity is about a relationship making you too trusting. No past work by you means it is not self-review.
Calling every pressure from a director intimidation. Fix: Intimidation needs a real or perceived threat, such as dismissal. A bonus offered for a result is self-interest.
Resigning or whistleblowing externally as the first step. Fix: Escalate internally first, consult, document, and withdraw only if the issue stays unresolved.
Classifying an employer policy as a profession-created safeguard. Fix: Ask who set it. Company codes, whistleblowing lines and internal controls belong to the employer.
Saying the ACCA Code of Ethics is rules-based. Fix: Remember the Code sets principles and expects judgement. Rules-based means detailed lists of permitted and banned acts.
Thinking the accountant's only duty is to the client or employer. Fix: Accountants also owe a duty to the public interest. Check who else relies on the work.

Exam tips

Learn the five principles in order and match each to one keyword before the exam.
In multiple response questions, select exactly the number stated and check each choice against the facts.
When two principles fit, choose the one the scenario is mainly built around.
Remember that confidentiality has exceptions for authority and legal or professional duty.
Do not mix up principles with threats; the principles are the rules you must follow.
Learn the five names and a one-word trigger for each. Most marks come from correct matching.
Read the last sentence of the scenario first. It often states the relationship or pressure that decides the category.
In multiple response questions, test each option on its own. Do not assume the options form a pattern.