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ACCA Applied Knowledge · Business and Technology · Corporate codes of ethics

A professional accountant is faced with a situation that no specific rule in the firm's code covers. Which feature of a principles-based framework is most helpful here?

A principles-based framework requires the accountant to apply the fundamental principles and professional judgement to identify, evaluate and respond to threats. This allows it to cope with new situations that no specific rule covers. The lack of a prohibiting rule does not make the conduct acceptable.

  1. AIt lets the accountant avoid any action since no rule prohibits it
  2. BIt requires the accountant to apply fundamental principles and judgement to identify and respond to threatsCorrect
  3. CIt requires the accountant to wait until a new rule is issued
  4. DIt allows the accountant to follow the practice of the majority of colleagues

Explanation

A principles-based framework is designed to cover new or unforeseen situations because the accountant applies the fundamental principles and judgement to identify, evaluate and address threats. Absence of a rule does not mean the conduct is acceptable, so the first option is wrong.

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