ACCA Applied Knowledge · Business and Technology · The role of regulatory and professional bodies in promoting ethical and professional standards in the accountancy profession
The accountancy profession's ethical codes are often described as following a conceptual framework approach rather than a rules-based approach. What is the main feature of this approach?
The conceptual framework requires accountants to identify, evaluate and address threats to the fundamental principles, using safeguards or avoiding the situation. It is principles-based and flexible, unlike a rules-based list of prohibitions, and client consent does not allow an accountant to ignore threats.
- AAccountants must identify, evaluate and address threats to compliance with the fundamental principlesCorrect
- BAccountants follow a detailed list of prohibited actions covering every situation
- CAccountants may ignore threats if the client consents in writing
Explanation
Under the conceptual framework, the accountant identifies threats to the fundamental principles, evaluates their significance and applies safeguards or otherwise eliminates the threat. A rules-based approach would list specific prohibitions. Client consent does not remove an ethical threat.
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