ICAI Professional Ethics Series: Code of Ethics for Chartered Accountants Decoded [Part 1]

What is Code of Ethics?

Every profession has its own Code of Ethics.

The Chartered Accountants Act, 1949 has been enacted by the Parliament for the regulation of the profession of Chartered Accountants and for the purpose of carrying out the object of the Act, the Chartered Accountants Regulations, 1988 have been enacted.

Ethics in accountancy profession are invaluable to the members and to those who rely on their services. Stakeholders including clients, governments, taxation authorities, employees, investors, the business and financial community etc perceive them as highly competent, reliable, objective and neutral people.

Chartered Accountants therefore, must not only be well qualified but also possess a high degree of professional integrity. Because of these high expectations, ICAI has adopted the code of ethics for the members to maintain a level of self-discipline that goes beyond the requirements of laws and regulations.

The Act has two schedules i.e. First Schedule & Second Schedule. The First Schedule has four parts:

Part I - Professional misconduct in relation to Chartered Accountants in Practice.

Part II - Professional misconduct in relation to Members of the Institute in Service.

Part III - Professional misconduct in relation to Members of the Institute generally.

Part IV - Other Misconduct in relation to the members of the Institute generally.

Stay Updated with the Latest Audit Report Formats & Audit Trials Requirements!, Click Here

The Second Schedule has three parts:

Part I - Professional misconduct in relation to Chartered Accountants in Practice.

Part II - Professional misconduct in relation to Members of the Institute generally.

Part III - Other misconduct in relation to members of the Institute Generally.

These two schedules along with the decisions of the Courts on professional misconducts, decisions, directions, guidelines, statements, clarifications and also interpretations of the Council on the various clauses of these two schedules constitute the Code of Ethics for the accountancy profession.

Part-A of the Code of Ethics, 2009 has been introduced inline with the IFAC Code in compliance obligations on membership with the ICAI. This part of the Code establishes a conceptual framework for all members to ensure compliance with five fundamental principles of professional ethics, namely, integrity, objectivity, professional competency and due Ethical Standards Board care, confidentiality and professional behavior.

Under the framework, all Chartered Accountants are required to identify the threats to these

fundamental principles and apply safeguards to ensure that the principles are not compromised. The framework applies to all Chartered Accountants, whether in practice or in service.

Sourced from ICAI FAQ on Ethical Issues, 2012 Edition.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates