Business and Technology · The role of regulatory and professional bodies in promoting ethical and professional standards in the accountancy profession
Ethical Codes and Standards for Accountants
Updated 11 October 2026 · Fact-checked
Ethical codes set the behaviour expected of professional accountants. The IESBA Code and the ACCA Code of Ethics and Conduct are built on five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. They use a principles-based approach, so you identify threats and apply safeguards rather than follow fixed rules.
Understand Ethical Codes and Standards for Accountants
A professional accountant is trusted by the public, employers and clients. That trust only works if accountants behave in a consistent, honest way. Ethical codes write down the behaviour that is expected.
The IESBA (International Ethics Standards Board for Accountants) issues the international Code of Ethics for Professional Accountants. The ACCA Code of Ethics and Conduct is ACCA's own code for its members and students. It is based on the IESBA Code. Both rest on five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.
A code can work in two ways. A rules-based approach gives detailed, specific rules for each situation. It is clear and easy to check, but it cannot cover every case, and people can look for loopholes. A principles-based approach sets broad principles and asks you to use judgement. It is flexible and covers new situations, but it is less certain and relies on honest judgement. The IESBA and ACCA codes are principles-based. They add examples and guidance, and some specific prohibitions, but the core is principles.
Standard setters are a different group. Accounting standards (IFRS Accounting Standards, issued by the IASB) say how to prepare financial statements. Auditing standards (International Standards on Auditing, issued by the IAASB) say how to carry out an audit. The IESBA sets ethics. All three aim to give users confidence in financial information.
Codes only matter if they are enforced. Professional bodies such as ACCA investigate complaints and can impose disciplinary action on members, including fines, reprimands, and removal from membership. Laws, audit regulators and employers add further enforcement.
Key formulas to remember
- Five fundamental principles
- Integrity | Objectivity | Professional competence and due care | Confidentiality | Professional behaviour
- This is the order the code lists them. A mnemonic such as I-O-P-C-P is optional. Two principles start with P, so tell them apart: competence and due care is about skill and diligence, while professional behaviour is about obeying laws and protecting the profession's reputation. Expect to match a described action to one principle.
- Integrity
- Be straightforward and honest in all professional and business relationships
- Includes not being associated with false or misleading information.
- Objectivity
- Do not let bias, conflict of interest or undue influence override professional judgement
- Threatened by close relationships, pressure and financial interest.
- Professional competence and due care
- Maintain knowledge and skill at the level needed, and act diligently in line with standards
- Linked to CPD and not accepting work you cannot do.
- Confidentiality
- Do not disclose or use information gained in work unless there is a right or duty to disclose
- Disclosure may be allowed with permission, or required by law.
- Professional behaviour
- Comply with laws and regulations and avoid conduct that discredits the profession
- Includes not making exaggerated claims about your services.
- Approach used
- IESBA and ACCA codes = principles-based approach (identify threats, apply safeguards)
- Rules-based is more detailed but less flexible.
- Standard setters
- IESBA = ethics | IASB = IFRS Accounting Standards | IAASB = International Standards on Auditing
- A common matching question.
How to solve Ethical Codes and Standards for Accountants questions
Use this method for any question on ethical codes, principles or approaches.
- 1Read the question and decide what is asked: a principle, an approach (rules or principles), a body, or enforcement.
- 2Underline the key facts in the scenario: who is acting, what they did, and who is affected.
- 3For a scenario, match the behaviour to one fundamental principle. Ask: is it honesty, bias, skill, secrecy or reputation?
- 4For an approach question, check the wording: detailed specific rules means rules-based; judgement, threats and safeguards means principles-based.
- 5For a body question, match the body to its job: IESBA ethics, IASB accounting standards, IAASB auditing standards, ACCA discipline of members.
- 6Remove options that are clearly wrong, then check the remaining options against the exact wording.
- 7For multiple response, count the number you must select and check each choice separately.
Quickest way: Keyword matching for ethics questions
When to use it: Use this for objective test questions when you have under a minute per question.
- Link a trigger word to a principle: lying or misleading = integrity; bias or pressure = objectivity; lack of skill or CPD = competence and due care; sharing client information = confidentiality; breaking law or bringing profession into disrepute = professional behaviour.
- Link approach words: fixed detailed rules = rules-based; judgement and safeguards = principles-based.
- Link body names to their output: IESBA code, IASB IFRS, IAASB ISAs.
- Pick the option that fits the trigger exactly, and check no other option fits better.
Common mistakes in Ethical Codes and Standards for Accountants
Saying the ACCA Code is rules-based because it is detailed.
The code contains a lot of guidance and examples, so it looks like a rulebook.
Fix: Remember it is principles-based at its core. The detail is there to help you apply the principles.
Mixing up objectivity and integrity.
Both sound like being fair and honest.
Fix: Integrity is honesty and straightforwardness. Objectivity is freedom from bias, conflict and undue influence.
Thinking confidentiality means information can never be disclosed.
The word suggests an absolute duty.
Fix: Disclosure is allowed with proper authority from the client or employer, or where there is a legal duty or right to disclose.
Confusing IESBA, IASB and IAASB.
The names and letters are similar.
Fix: IESBA has E for Ethics, IASB has A for Accounting, and IAASB has AA for Auditing and Assurance.
Assuming a principles-based code means there are no consequences.
Flexible wording seems less strict.
Fix: Breaches can lead to disciplinary action by the professional body, for example ACCA, and may break the law as well.
Calling a rules-based approach better because it is clear.
Certainty feels safer.
Fix: State both sides. Rules are clear but can be bypassed and cannot cover everything. Principles are flexible but rely on judgement.
Worked examples
Example 1
An accountant at a company is asked by the finance director to change the closing inventory figure so that profit looks higher. The accountant knows the figure would mislead the bank. Which fundamental principle is most directly breached if the accountant agrees?
A Integrity
B Confidentiality
C Professional competence and due care
D Objectivity
Show the solution
- Identify the behaviour: knowingly producing a misleading figure for the bank.
- Match it to a principle: being honest and not associated with misleading information is integrity.
- Check the others: no client information is disclosed, so not confidentiality; the problem is not lack of skill, so not competence and due care.
- Check objectivity: the finance director's pressure is an undue influence threat, so objectivity is also under strain. But the act the accountant would carry out is knowingly giving false information to the bank. That is dishonest, so integrity is the most direct breach.
- Choose A.
Answer: A Integrity.
Example 2
Which TWO statements about a principles-based approach to ethics are correct?
1 It requires accountants to identify threats and apply safeguards.
2 It sets detailed rules for every possible situation.
3 It can be applied to new situations that no rule has covered.
4 It removes the need for judgement.
Show the solution
- Test statement 1: identifying threats and applying safeguards is how the IESBA and ACCA codes work. Correct.
- Test statement 2: detailed rules for every situation describes a rules-based approach. Incorrect.
- Test statement 3: broad principles can be used for new situations. Correct.
- Test statement 4: principles rely on judgement, so this is wrong.
- Select statements 1 and 3.
Answer: Statements 1 and 3 are correct.
Exam tips
- Learn the five fundamental principles in order and be able to give a one-line meaning of each.
- In scenario questions, find the single behaviour that matches a principle, and watch for options that are true but do not answer the question.
- Know the three standard setters and what each issues: IESBA ethics, IASB accounting standards, IAASB auditing standards.
- For rules versus principles, be ready to give one advantage and one disadvantage of each.
- In multiple response questions, select exactly the stated number and test each statement separately.
Practice questions from The role of regulatory and professional bodies in promoting ethical and professional standards in the accountancy profession
- Which of the following is an advantage of self-regulation for the accountancy profession?
- A member learns confidential information about a client's plans during an engagement. In which situation would disclosure of that informatio…
- Which of the following is one of the five fundamental principles in the IESBA Code of Ethics for Professional Accountants?
- A key advantage often claimed for self-regulation of the accountancy profession, compared with direct state regulation, is that:
- Which statement best describes the effect of ACCA's Code of Ethics and Conduct on its members?
Ethical Codes and Standards for Accountants: frequently asked questions
What are the fundamental principles of the ACCA Code of Ethics and Conduct?
There are five: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. They apply to all ACCA members and students. The IESBA Code uses the same five.
Is the ACCA code rules-based or principles-based?
It is principles-based. You identify threats to the fundamental principles and apply safeguards to reduce them. It also gives examples and some specific requirements to help you apply the principles.
How are ethical standards enforced in accountancy?
Professional bodies such as ACCA investigate complaints and can discipline members, for example with reprimands, fines or removal from membership. Audit regulators, the law and employers also play a part.
What is the difference between the IESBA and the IAASB?
The IESBA sets ethical standards for professional accountants. The IAASB sets International Standards on Auditing and related assurance standards. The IASB is separate and sets IFRS Accounting Standards.