Audit and Assurance · Objective and general principles

Ethical Principles and the ACCA Code of Ethics for Audit and Assurance

Updated 11 October 2026 · Fact-checked

The ACCA Code of Ethics sets five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. You identify threats to them (self-interest, self-review, advocacy, familiarity, intimidation), judge their significance, then apply safeguards or decline or withdraw if the threat cannot be reduced to an acceptable level.

Understand Ethical Principles and ACCA Code of Ethics

Auditors give users confidence in financial statements. That confidence exists only if users trust the auditor. Ethics rules protect that trust. The ACCA Code of Ethics takes a principles-based approach. It does not list every banned act. It gives you principles and a framework for judging situations.

There are five fundamental principles:

Integrity: be straightforward and honest in all professional and business dealings.
Objectivity: do not let bias, conflict of interest or the influence of others override your professional judgement.
Professional competence and due care: keep your knowledge and skills up to date, and act diligently in line with technical and professional standards.
Confidentiality: do not disclose information gained through work without proper authority, unless there is a legal or professional right or duty to disclose. Do not use it for personal advantage.
Professional behaviour: comply with relevant laws and avoid conduct that discredits the profession.

A threat is anything that might stop you complying with a principle. The Code groups threats into five types:

Self-interest: a financial or other interest of the firm or a person in it influences judgement. Examples: a large fee dependent on the client, owning shares in the client, fear of losing the client.
Self-review: you review your own earlier work or that of your firm. Example: the audit firm prepares the financial statements, or does a valuation that is audited.
Advocacy: you promote a client's position so that objectivity is compromised. Example: acting as the client's lawyer in a dispute or promoting its shares.
Familiarity: a long or close relationship makes you too sympathetic or trusting. Example: the same senior person on an audit for many years, or a close family member in a senior client role.
Intimidation: you are deterred from acting objectively by actual or perceived pressure. Example: a dominant director threatens to replace the auditor.

When you spot a threat, you decide whether it is at an acceptable level, meaning a reasonable and informed third party would conclude you still comply with the principles. If not, you apply safeguards to remove it or reduce it. If no safeguard works, you must eliminate the circumstance, decline the work or withdraw. Typical safeguards are a second partner review, using separate teams, rotating senior staff, disclosure to those charged with governance, and declining the non-audit work.

Key rules to remember

Five fundamental principles: Integrity + Objectivity + Professional competence and due care + Confidentiality + Professional behaviour; Learn them as a set. Name the exact principle at risk in every answer.
Five types of threat: Self-interest, Self-review, Advocacy, Familiarity, Intimidation; Memory aid: SSAFI. Match the situation to one type and say why.
Framework for any ethics issue: Identify threat → Evaluate significance → Apply safeguards → If not reduced to acceptable level, decline or withdraw; This is the structure of a good written answer.
Acceptable level test: Would a reasonable and informed third party conclude compliance with the principles is not compromised?; The test is objective. It is not what you personally feel.

How to solve Ethical Principles and ACCA Code of Ethics questions

Use this method for scenario-based ethics questions, whether they are objective test questions or written requirements.

1Read the requirement. Decide if you must identify threats, explain safeguards, or both.
2Underline the facts that signal a relationship, interest, fee, service or pressure.
3For each fact, name the threat type (self-interest, self-review, advocacy, familiarity or intimidation) and the principle affected, usually objectivity.
4Explain why in one sentence using the scenario facts. Do not give a general definition only.
5Assess how significant it is: size of fee, seniority of the person, length of relationship, whether the matter is material.
6State a specific safeguard that fits the threat, such as a different team, an independent partner review or rotation.
7If no safeguard can reduce the threat to an acceptable level, say the firm should decline or withdraw and, where relevant, communicate with those charged with governance.
8Check that each threat has a named safeguard and the number of points matches the marks.

Quickest way: Threat, fact, safeguard in one line

When to use it: Use this for objective test questions and for short written parts when time is tight.

Spot the key phrase: shares or fee dependence means self-interest; preparing accounts or valuations means self-review; long service or family means familiarity; threats or pressure means intimidation; representing the client means advocacy.
Eliminate options that name the wrong threat type.
For safeguard questions, choose the option that removes the cause or adds independent review, not one that only adds paperwork.
In written answers, use one line per point: Threat – because of fact – safeguard.

Common mistakes in Ethical Principles and ACCA Code of Ethics

Listing the five principles with no link to the scenario.
Students memorise definitions and stop there.
Fix: Always tie each threat to a specific fact from the scenario and say which principle is at risk.
Confusing self-interest and self-review.
Both can arise when the firm does extra work for an audit client.
Fix: Ask whether the auditor would be checking its own work (self-review) or is influenced by a financial or personal gain (self-interest).
Suggesting a safeguard that does not work.
Students write generic safeguards such as 'be more careful'.
Fix: Name a concrete safeguard: a separate team, a second partner review, rotation or declining the work.
Assuming every threat can be safeguarded.
Students forget the final step of the framework.
Fix: State that if the threat remains significant, the firm should decline the engagement or withdraw.
Treating confidentiality as absolute.
Students remember the duty but not the exceptions.
Fix: Say disclosure is allowed or required where the client consents, law requires it, or there is a professional right or duty to disclose.
Calling any gift or fee a threat without considering its significance.
Students rush to say the threat exists and skip the evaluation.
Fix: Comment on size, nature and context, then decide if it is at an acceptable level.

Worked examples

Example 1

Bale & Co audits Corin Ltd. Corin's finance director has asked Bale & Co to prepare the year-end financial statements because its own accounts team is understaffed. Bale & Co would also audit those statements. Identify the threat and suggest safeguards. (4 marks)

Show the solution

Fact: the firm prepares the financial statements and then audits them.
Threat: self-review. The audit team may not challenge judgements the firm itself made. Objectivity is at risk.
There is also a possible self-interest threat if the extra fee is significant to Bale & Co.
Safeguard 1: use staff who are not part of the audit team to prepare the statements, and have an independent partner review the work.
Safeguard 2: ensure Corin's management takes responsibility for the statements and approves the judgements.
If the threat cannot be reduced to an acceptable level, which is more likely for a listed or public interest entity, decline the accounts preparation work.

Answer: This is a self-review threat to objectivity, with a possible self-interest threat from the extra fee. Safeguards are separate teams, independent partner review and management taking responsibility. If the threat remains significant, Bale & Co should decline the preparation work.

Example 2

Objective test: A partner has led the audit of Dax plc for twelve years and now has a close personal friendship with the finance director. Which type of threat is MOST clearly present? A Self-review B Familiarity C Advocacy D Intimidation

Show the solution

Key facts: long service and close friendship.
Self-review needs the auditor to review own or firm's work. Not present.
Advocacy needs promoting the client's position. Not present.
Intimidation needs pressure or threat. Not present.
Long association and personal closeness point to familiarity.

Answer: B Familiarity. A suitable safeguard is rotating the partner off the engagement.

Exam tips

Always write the threat type by name. Marks are given for the correct label plus the scenario link.
Give a safeguard for every threat you identify. Examiners often award a mark for each pairing.
In objective tests, look for the single trigger fact (shares, fee, family, long service, pressure) and match it to one threat.
Use the words 'reasonable and informed third party' when judging whether a threat is acceptable.
Do not stop at 'resign'. Explain the steps first, and state resignation only when safeguards are not enough.

Ethical Principles and ACCA Code of Ethics in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Ethical Principles and ACCA Code of Ethics: frequently asked questions

What are the fundamental principles in the ACCA Code of Ethics?

They are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. Every ethics question in AA tests one or more of these. Name the principle that is at risk in your answer.

What is the difference between self-interest and self-review threats?

A self-interest threat comes from a financial or personal interest, such as holding shares or depending on a fee. A self-review threat arises when you evaluate work that you or your firm produced. The same situation can create both, so mention both when the facts support it.

How do I answer ethics questions in the AA exam?

Identify the threat, link it to scenario facts, explain the principle at risk and give a specific safeguard. If no safeguard is enough, say the firm should decline or withdraw. Match the number of points to the marks available.

Can an auditor ever disclose confidential information?

Yes. Disclosure is permitted where the client has agreed, or where the law requires it, or where there is a professional right or duty to disclose. Outside those cases the auditor must keep information confidential and not use it for personal gain.