PROFESSIONAL ETHICS AND

PROFESSIONAL ACCOUNTING SYSTEM

(PEA 108)

SUBMITTED BY
ABHISEK RAJ (1283005)
B.A.-LLB (A), (CRIMINAL LAW HONS.), 10th
SEMESTER

Page 1 of 21
 PART-A

Q.3. Enumerate qualifications of a person to be admitted as an advocate.

Ans. Eligible persons are admitted as advocates on the rolls of the State Bar Councils. The
Advocates Act, 1961 empowers State Bar Councils to frame their own rules regarding
enrolment of advocates. The Council's Enrolment Committee may scrutinise a candidate's
application. Those admitted as advocates by any State Bar Council are eligible for a
Certificate of Enrolment.

Section 24 of the Advocates Act specifies the qualifications of a person entitled to be enrolled
into the Bar. The section states that a person shall be qualified to be admitted as an advocate
on a State roll, if he fulfils the following conditions:

i. he is a citizen of India,
Provided that subject to the other provisions contained in the Act, a national of any
other country may be admitted as an advocate on a State roll, if citizens of India, duly
qualified, are permitted to practise law in that other country.
ii. he has completed the age of twenty-one years,
iii. he has obtained law degree
a. before the 12th day of March, 1967, from any University in the territory of
India;
b. before the 15th August, 1947, from any University in any area which was
comprised before that date within India as defined by the Government of India
Act, 1935;
c. after the 12th day of March, 1967, after undergoing a three year course of
study in law from any University in India which is recognised by the Bar
Council of India;
d. after undergoing a course of study in law, the duration of which is not less than
two academic years commencing from the academic year 1967-68 or any
earlier academic year from any University in India which is recognised by the
Bar Council of India;
e. from any University outside the territory of India, if the degree is recognised
by the Bar Council of India or he is barrister and is called to the Bar on or
before the 31st day of December, 19764, or has passed the article clerks
examination or any other examination specified by the High Court at Bombay

2|Page
 or Calcutta for enrolment as an attorney of that High Court, or has obtained
such other foreign qualification in law as is recognised by the Bar Council of
India for the purpose of admission as an advocate.
iv. he has paid, in respect of the enrolment, stamp duty, if any, chargeable under the
Indian Stamp Act, 1899 (2 of 1899), and an enrolment fee payable to the State Bar
Council of six hundred rupees and to the Bar Council of India, one hundred and fifty
rupees by way of a bank draft drawn in favour of that Council and incase such person
is a member of Scheduled Caste or Tribe and produces certificate to that effect from
authority the enrolment fee payable by him to State Bar Council shall be one hundred
rupees and to the Bar Council of India, twenty five rupees.
v. a vakil or a pleader who is a law graduate may be admitted as an advocate on state roll
if he makes an application for enrolment not later than two years from the appointed
day.
vi. a person who has been vakil or pleader for or mukhtar or was entitled to be enrolled
under any law as an advocate of a High Court or of a Court of Judicial Commissioner
in any Union Territory or before the 1st day of December, 1961, was entitled
otherwise than as an advocate practise the profession of law (whether by of pleading
or acting or both) by virtue of the provision of any law, or who would have been so
entitled had he not been in public service on the said date, or before the 1st day of
April, 1937, has been an advocate of any High Court in any area which was
comprised within Burma as defined in the Government of India Act, 1935, or is
entitled to be enrolled as an advocate under any rule made by the Bar Council of India
in this behalf, may be admitted as an advocate on a State roll if he makes an
application for such enrolment and fulfils the conditions specified in clauses (a), (b),
(e) and (f) of sub-section (1).

At present, a person who wants to get enrolled as an advocate has to first clear Bar Council of
India exam. Thereafter the person can enrol himself/ herself under any State Bar Council.
Eligible persons are admitted as advocates on the rolls of the State Bar Councils. The
Advocates Act, 1961 empowers State Bar Councils to frame their own rules regarding
enrolment of advocates. Different state bar councils have formulated their own rules
regarding enrolment as an advocate. However, most of the State Bar Council requires the
candidate to submit an application along with the degree of law and mark sheets along with
judicial Stamp paper and requisite fees. However, the amount of money is not confined to the

3|Page
Rs. 750-/ as far as the different state bar councils are concerned. There are several other fees,
insurance premiums, Gazette Notification costs, Advocate's Card costs etc. involved, which
brings the total amount required close to Rs. 4000/- to Rs. 5000/-, depending on the state
where one gets enrolled. Separate information on some of the councils will be forthcoming
soon.

Q.4. What is professional misconduct and what are the conditions required for
applicability of S.35 of Advocates Act?

Ans. The misconduct has been defined in Black's Dictionary as transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, unlawful
behaviour, improper or wrong behaviour.
Advocacy is a noble profession and an advocate is the most accountable, privileged and
erudite person of the society and his act are role model for the society, which are necessary to
be regulated. Professional misconduct is the behaviour outside the bounds of what is
considered acceptable or worthy of its membership by the governing body of a profession.
Professional misconduct refers to disgraceful or dishonourable conduct not befitting an
advocate.
Chapter V of the Advocate Act, 1961, deals with the conduct of Advocates. It describes
provisions relating to punishment for professional and other misconducts. Section 35(1) of
the Advocate Act, 1961, says, where on receipt of a complaint or otherwise a State Bar
Council has reason to believe that any advocate on its roll has been guilty of professional or
other misconduct, it shall refer the case for disposal to it disciplinary committee. Members
belonging to this profession should not encourage deceitfulness and corruption, but they have
to strive to secure justice to their clients. The credibility and reputation of the profession
depends upon the manner in which the members of the profession conduct themselves. It's a
symbol of healthy relationship between Bar and Bench.
In order to attract the application of section 35 of the Advocates Act, the misconduct need not
be professional misconduct alone. The expression used in the section is professional or other
misconduct. So even conduct unconnected with the profession may account to a misconduct
as for example, conviction for a crime, though the crime was not committed in the
professional capacity. At the same time it is to be noted that a mere conviction is not
sufficient to find an advocate guilty of misconduct, the court must look in to the nature of the

4|Page
act on which the conviction is based to decide whether the advocate is or is not an unfit
person to be removed from or to be allowed to remain in the profession.
In Sambhu Ram Yadav v. Hanuman Das Khatry, an advocate was found engaging in bribery
and influencing the judge. It was held to be "misconduct".
In N.G. Dastane v. Shrikant S. Shind, where the advocate of one of the parties was asking for
continuous adjournments to the immense inconvenience of the opposite party, it was held by
the Supreme Court that seeking adjournments for postponing the examination of witnesses
who were present without making other arrangements for examining such witnesses is a
dereliction of the duty that an advocate owed to the Court, amounting to misconduct and thus
contempt.
In the most controversial and leading case of R.K. Ananad v. Registrar of Delhi High Court,
On 30th May, 2007 a TV news channel NDTV carried a report relating to a sting operation.
The report concerned itself with the role of a defence lawyer and the Special Public
Prosecutor in an ongoing Sessions trial in what is commonly called the BMW case. The
question for our consideration is whether Mr. R.K. Anand and Mr. I.U. Khan, Senior
Advocates and Mr. Sri Bhagwan Sharma, Advocate have committed criminal contempt of
Court or not. It was observed that prima facie their acts and conduct were intended to subvert
the administration of justice in the pending BMW case and in particular to influence the
outcome of the pending judicial proceedings. Accordingly, in exercise of powers conferred by
Article 215 of the Constitution proceedings for contempt of Court (as defined in Section 2(c)
of the Contempt of Courts Act, 1971) were initiated against Mr. Anand, Mr. Khan and Mr. Sri
Bhagwan Sharma.
Q.6. Section 49(1)(c) of Advocates Act is in substance the professional ethics which an
advocate is obliged to follow. Keeping this in view discuss the duty of an advocate to his
opponent and his fellow colleagues.

Ans. Advocates, in addition to being professionals, are also officers of the courts and play a
vital role in the administration of justice. Accordingly, the set of rules that govern their
professional conduct arise out of the duty that they owe the court, the client, their opponents
and other advocates. Rules on the professional standards that an advocate needs to maintain
are mentioned in Chapter II, Part VI of the Bar Council of India Rules. These rules have been
placed there under section 49(1)(c) of the Advocates Act, 1961.
Rules on an advocate's duty towards fellow advocates:

5|Page
 1. Not advertise or solicit work: An advocate shall not solicit work or advertise in any
manner. He shall not promote himself by circulars, advertisements, touts, personal
communications, interviews other than through personal relations, furnishing or
inspiring newspaper comments or producing his photographs to be published in
connection with cases in which he has been engaged or concerned.

2. Sign-board and Name-plate: An advocate’s sign-board or name-plate should be of a

reasonable size. The sign-board or name-plate or stationery should not indicate that he
is or has been President or Member of a Bar Council or of any Association or that he
has been associated with any person or organization or with any particular cause or
matter or that he specializes in any particular type of work or that he has been a Judge
or an Advocate General.

3. Not promote unauthorized practice of law: An advocate shall not permit his
professional services or his name to be used for promoting or starting any
unauthorized practice of law.

4. An advocate shall not accept a fee less than the fee, which can be taxed under rules
when the client is able to pay more.

5. Consent of fellow advocate to appear: An advocate should not appear in any matter
where another advocate has filed a vakalat or memo for the same party. However, the
advocate can take the consent of the other advocate for appearing. In case, an
advocate is not able to present the consent of the advocate who has filed the matter for
the same party, then he should apply to the court for appearance. He shall in such
application mention the reason as to why he could not obtain such consent. He shall
appear only after obtaining the permission of the Court.

Rules on advocate's duty to opponents

i. Not to negotiate directly with opposing party: An advocate shall not in any way
communicate or negotiate or call for settlement upon the subject matter of controversy
with any party represented by an advocate except through the advocate representing
the parties.

6|Page
 ii. Carry out legitimate promises made: An advocate shall do his best to carry out all
legitimate promises made to the opposite party even though not reduced to writing or
enforceable under the rules of the Court.

Q.7. Discuss the skills/ techniques of an advocate for interviewing his client.

Ans. The client interview assessment is all about your face-to-face customer service skills
under the watchful gaze of the professional conduct rules. You are expected to conduct an
interview with a 'client' in order to obtain and convey the information required without
stepping outside of what you know or can do. The information you obtain should be enough
for you to take the next steps without going back to the client for more. What you tell the
client should cover off your professional conduct and give a little advice regarding their
situation. The interview will be based in an area of law. You will be expected to know enough
about the law to be able to obtain the salient facts from the client. You may also have been
given some preparatory information to guide you towards the correct advice to give.
Interviewing clients is a skill that improves with practice and experience.

Regarding interviewing styles, open and closed questioning is something which is usually
followed. Open questions allow more than one word answers, for example: 'What happened?',
'Could you explain a little of the background please?', 'How can I help today?' Closed
questions allow very limited answers, even down to just a yes or no, such as: 'What date did it
happen?', 'Where do you live?', 'Do you have insurance?' Open questions are good to get the
client talking and to get the conversation flowing whereas closed questions get the details out.
A good interview technique is to start with open questions and slowly narrow down to closed
until you have the information you need.

Preparation is key for the interview – having your thoughts clear about what you need to ask
and what is going to happen will really help you to get through the conversation. The thing to
remember is that you have only a few boxes to tick and you are not being graded on your
knowledge of the law. Lawyers often forget that personal skills go a long way.

Before the interview

• Plan your interview. Some knowledge of the background and issue will help, so ask
your client for a brief summary before the interview. You will both feel more at ease
at the interview if you have prepared.
7|Page
 • You and your firm should appear professional to your client. An unkempt
appearance or an untidy meeting room is not only distracting, but can also give your
client the impression that you aren't very professional or organised. Be punctual if
the meeting is not at your office.

During the interview

• Your client might be anxious, particularly if they aren't familiar with the legal
system. Introduce yourself with a smile so they feel welcome. Build rapport by
engaging in small talk.
• Once everyone is seated and settled, let your client know the structure of interview
and that you'll be making notes so they know what to expect.
• Invite them to tell you their story or concerns, preferably in chronological order.
Often they just need a listening ear. Steer the interview by listening actively. Focus
on specific areas that are relevant. Your client doesn't necessarily know what is
relevant but you do.
• Avoid legal jargon, be respectful and maintain a balanced amount of eye contact.
All this should be done in calm and collected manner.
• Sum up the interview and outline steps going forward. Depending on technical
skills and experience one might be able to give a preliminary view. But if in doubt,
explain it to the client to consider the matter carefully before you can form a view.
Whatever you do, do not give legal advice without proper consideration.
• Discuss legal fees (if applicable) and leave time for questions.
• Finally, walk your client to the exit and thank them.

Incase of a rude, pushy or condescending client it's important to stay calm and remain
professional. Also consider reporting it to your supervisor.

After the interview

• Make a detailed file note while it is fresh in your mind.
• Diarise any follow ups and deadlines.
• Discuss any concerns with your colleagues/supervisor.
• Once approved by your supervisor, send your advice (and any costs disclosure
documents) to your client. Call them to let them know you've sent it

8|Page
Q. 8. Discuss the importance and object of cross examination.

Ans. In India where large number of complaints and cases are filed in civil and criminal
courts every day, delay in justice is common as pendency of cases in courts are also growing
rapidly. Examination of witnesses plays an important role in the presentation of the evidence
in a court of law irrespective of civil or criminal case and admissibility of evidence is also an
important aspect which has to be decided by the judges only. Due to which each case will be
looked upon clearly and it will take long time to pass the judgment by the court. The
examination of witnesses can be classified into three types as defined under 'Sec- 137' of
'Indian Evidence Act, 1872' as follows:

Examination-in-chief means the examination of witness by the party who calls him shall be
called his examination-in-chief. Cross-Examination means the examination of witness by the
adverse party shall be called his cross-examination.

The art of Cross-Examination plays an important role in the trial of each case which involves
hard work and talent of lawyers while providing justice to their clients. A perfect lawyer
should learn the art of Cross-Examination not by reading newspapers but the successful artist
learns by doing it, or watching others do it well; by reading trial and deposition transcripts or,
better yet, by conducting the examination personally. The trial lawyer must learn as well to
adapt to particular witnesses and different cases.

The right of Cross-Examination is one of the most powerful instrumentalities provided

lawyers in the conduct of litigation. One of the most important purposes of Cross-
Examination is to attempt to destroy the testimony or the credibility of the opponent's
witnesses. Justice is not served if a witness is unable to communicate credibility to a jury. The
search for truth is the ultimate and idealistic end of all litigated matter in a court trial.

The main object of Cross-Examination is to find out the truth and detection of falsehood in
human testimony. It is designed either to destroy or weaken the force of evidence which is
already given by a witness. Cross-Examination of witness is a duty of every lawyer towards
his client and not a matter of glory and fame. It is the most efficacious test to discover the
truth and to detect the false statements of the witness. It should be remembered that the
Justice should not be defeated by the improper Cross-Examination. One of the purposes of
Cross-Examination is to asking questions regarding what the witness has stated in the

9|Page
Examination-in-chief and the answer is the reply by the witness to the question put by the
advocate.

Often, however, one needs to spend time with the witness to develop several critical points to
counter the impact of the direct examination. Before initiating a Cross-Examination of any
witness, the lawyer should clearly bear in mind those points he or she wishes to make with
that witness. And then, he or she should write them down. These points also should be
discussed with those who are assisting at trial. Patience is the virtue in Cross-Examination
and judges must give chance to every party to Cross-Examine the other party's witness.

A lawyer should use leading questions i.e. "is that correct?" and "isn't it a fact" etc. at the time
of Cross-Examining of the witness because asking only leading questions is perhaps the
oldest rule of Cross-Examination. It is an old rule because it is a good one. Leading questions
are most effective because they essentially allow the Cross-Examiner to testify and the
witness to ratify. The technique advances one of the important dynamics of the courtroom is
control. Asking leading questions allows the Cross-Examiner to be forceful, fearless,
knowledgeable and informative. Good thing come from leading questions. Usually be aware
that leading questions also can grow tiresome. No one likes to hear a hundred questions in a
row that end with, "is that correct?" and all the questions put during the trial of Cross-
examination must be lawful as permitted under 'Sec- 146' of 'Indian Evidence Act, 1872'.

Questions asked during the Cross-Examination must be relevant to the issue related in the
facts of the case and indecent and scandalous questions can also be asked by the advocate at
the time of Cross-Examination unless they relate to the fact in issue. Most importantly
questions intended to insult or annoy should be forbidden by the court though questions
seems to be proper.

The court who has authoritative power to decide the case can recall the witness for the Cross-
Examination based on the facts and circumstances of the particular case and a summary
procedure does not take away the rights of the parties to Cross-Examine whereas every party
has to be given fair deal in the matter of Cross-Examination. There are certain important
points which can be considered as chief heads of the Cross-Examination as follows:-

1. To cause the witness to alter or amend his evidence by questioning about his testimony.

2. To modify the evidence given under the Examination-in-chief, by causing the witness to
speak to supplementary facts to show the reasons and circumstances.

10 | P a g e
3. To discredit the evidence of witness by putting questions connected with his character.

4. From reasons arising out of his evidence by causing him to give further evidence.

5. To cause him to give evidence to be received as true.

Q. 9. What do you mean by 'Bench', 'Bar' and 'Court'? Briefly discuss the relationship
between 'Bench' and 'Bar'.

Ans. Bench means a seat of judgment or tribunal for the administration of justice; the seat
occupied by judges in courts; also the court itself, as the "King's Bench," or the aggregate of
the judges composing a court, as in the phrase "before the full bench." The collective body of
the judges in a state or nation, as distinguished from the body of attorneys and advocates,
who are called the "bar" or in other terms the aggregate body of bishops. It is a tribunal or
place where justice is administered.

Bar means a partition or railing running across a court-room, intended to separate the general
public from the space occupied by the judges, counsel, jury, and others concerned in the trial
of a cause. In the English courts it is the partition behind which all outer-barristers and every
member of the public must stand. Solicitors, being officers of the court, are admitted within
it; as are also queen's counsel, barristers with patents of precedence, and sergeants, in virtue
of their ranks. Parties who appear in person also are placed within the bar on the floor of the
court. The term also designates a particular part of the court-room; for example, the place
where prisoners stand at their trial, whence the expression "prisoner at the bar.". It further
denotes the presence, actual or constructive, of the court. Thus, a trial at bar is one had before
the full court, distinguished from a trial had before a single judge at nisi prius. So the "case at
bar" is the case now before the court and under its consideration ; the case being tried or
argued. In the practice of legislative bodies, the bar is the outer boundary of the house, and
therefore all persons, not being members, who wish to address the house, or are summoned to
it appear at the bar for that purpose. In another sense, the whole body of attorneys and
counsellors, or the members of the legal profession, collectively, are figuratively called the
'bar', from the place which they usually occupy in court.

Court means a judicial tribunal established to administer justice. An entity in the government
to which the administration of justice is delegated. Judicial Courts are created by the
government through the enactment of statutes or by constitutional provisions for the

11 | P a g e
purpose of enforcing the law for the public good. They are impartial forums for the resolution
of controversies between parties who seek redress from a violation of legal right. Both civil
and criminal matters may be heard in the same court, with different court rules and
procedures for each.

Bar in a legal context has three possible meanings: the physical division of a courtroom
between its working and public areas; the process of qualifying to practice law; and the legal
profession. The bench is used to refer to a group of judges as a collective whole. It is a
tribunal or place where justice is administered. To appear before the full bench means to
appear before the entire group of judges of the court. Bench and Bar are the two arms of the
same machinery and unless they work harmoniously, justice cannot be properly administered
through the courts of law. But lapses occur from both' sides, which tend to stiffen their
relationship. The lawyers in the discharge of their duties have sometimes to use expressions
which may not be palatable to the court but they are never used either with the intention of
offering any insult or causing any interruption to the proceedings of the court.

Good behaviour of lawyers goes a long way in their attempt to acquire justice from the court
for their clients. Not only the scholarship of a lawyer plays an important role in achieving
success in the court rather his good conduct also helps and plays effectively in this direction.
The statements of the lawyers influence the court, so they are under moral and legal
obligation to be sober, fair and cordial in their dealings with the court. It does not mean that
the lawyers have to surrender to the improper behaviour of the judge. The lawyers have legal
right to object the improper behaviour of the judge and they are entitled to enlighten their
grievances to the higher authorities of the court. It is the behaviour of the judge with the
lawyers, which makes the atmosphere of the court quite cordial and congenial. A judge has to
be impartial in his dealings with advocates. The judge should not only be free from bias or
interest in any case rather he should not be guided by the obstinacy and snobbery in his
conduct with advocates.

It is pertinent to note that the relationship between the advocate and judge is quite delicate.
On the one hand, it is important to allow an advocate to be firm and resolute in the pursuance
of his case while on the other, the judge must maintain his authority in the court. Of course,
an advocate should avoid rule, insolent or insulting behaviour but a judge should not be over-
sensitive to the remarks made against him. The judge should respect and safeguard the

12 | P a g e
privileges of the bar. The counsel has a right to insist for a courteous and patient hearing from
a judge till he is respectfully and relevantly arguing his case before him. This right of the
counsel deserves due respect from the Judge. The judge has no business to form a forehand
opinion before the case is heard by him.

In P.D. Gupta v. Ram Murti and Others, the Supreme Court said, a lawyer owes a duty to be
fair not only to his client but also to the court as well as to the opposite party in the conduct
of the case. Administration of justice is a stream which has to be kept pure and clean. It has to
be kept unpolluted. Administration of justice is not something which concerns the Bench
only. It concerns the Bar as well. The Bar is the principal ground for recruiting judges.

Q. 10. What is contempt of Court, discuss with case laws?

Ans. Contempt of court refers to any actions which defy a court's authority, cast disrespect on
a court, or impede the ability of the court to perform its function. The elements generally
needed to establish contempt are:

• the making of a valid court order

• knowledge of the order by respondent
• ability of the respondent to render compliance
• wilful disobedience of the order

Any act which hinders or impairs the judicial proceedings and interferes in the administration
of justice constitutes Contempt of Court. Such act or conduct is dealt under the Contempt of
Court Act, 1971. Section 2(a) defines contempt as both civil and criminal contempt. Civil
Contempt, as per Section 2(b), means wilful disobedience to any judgment, decree, direction,
order, writ or other process of a court or wilful breach of an undertaking given to a court.
Criminal Contempt has been defined in Section 2(c) which states that Publication of any
matter or any other act which lowers or tends to lower the authority of any court or interferes
or tends to interfere in the judicial proceedings or administration of justice. The purpose of
contempt jurisdiction is to uphold the majesty and dignity of law. If by contentious words or
writings the common man is led to lose his respect for the judiciary, then the confidence
reposed in the courts is rudely shaken and the offender needs to be punished. In essence of
law of contempt is the protector of the seat of justice more than the

13 | P a g e
person sitting of the judge sitting in that seat. A third party to the proceeding may be guilty of
contempt of court if they have a part to play in the offence. According to Section 20 of the
Contempt of Courts Act of 1971 the limitation period for initiating contempt proceedings is
of one year from the date on which the contempt is alleged to have been committed.

The Supreme Court was confronted with the conflict between freedom of speech and
Contempt of court in the landmark case of Bathina Ramakrishna Reddy v. The State of
Madras. In this case the appellant made allegations of bribery and corruption against one
Sub-Magistrate in an article published in a Telgu Weekly. The High Court after hearing the
parties came to the conclusion that the publication in question did amount to contempt of
court, as it was calculated to lower the prestige and dignity of courts and bring into disrepute
the administration of justice.

A five judge bench, in Brahama Prakash Sharma v. U.P the Supreme Court herein reversed
the order of the High Court which had held the executive committee of the district bar
association guilty of contempt of court stating that "It was their considered opinion that the
two officers are thoroughly incompetent in law, do not inspire confidence in their Judicial
work, are given to state wrong facts when passing orders and are overbearing and
discourteous to the litigant public and lawyers alike."

In E. M. S. Namboodripad v. T. Narayanan Nambiar's, case the conviction was based certain

utterance of the appellant, 'judges are guided and dominated by class hatred, class interest and
class prejudices', 'instinctively favour the rich against the poor…' the Court observed that
while it is intended that there should be freedom of speech and expression, it is also intended
that in exercise of the right, contempt of court shall not be committed. Freedom of speech and
expression, observed the court, will always prevail except where contempt is manifest,
mischievous or substantial.

14 | P a g e
 PART-B

Q.1. What do you mean by accounting ethics? Is it necessary for an accounting

professional? What are the factors on the basis of which such ethics are planned?

Ans. Accounting ethics is primarily a field of applied ethics and is part of business ethics and
human ethics, the study of moral values and judgments as they apply to accountancy.
Accountants and the accountancy profession exist as a means of public service; the
distinction which separates a profession from a mere means of livelihood is that the
profession is accountable to standards of the public interest, and beyond the compensation
paid by clients. It is an example of professional ethics. Accounting introduced by Luca
Pacioli, and later expanded by government groups, professional organizations, and
independent companies. Ethics are taught in accounting courses at higher education
institutions as well as by companies training accountants and auditors.

Due to the diverse range of accounting services and recent corporate collapses, attention has
been drawn to ethical standards accepted within the accounting profession. These collapses
have resulted in a widespread disregard for the reputation of the accounting profession. To
combat the criticism and prevent fraudulent accounting, various accounting organizations and
governments have developed regulations and remedies for improved ethics among the
accounting profession.

The American Institute of Certified Public Accountants (AICPA) is a professional

organization responsible for developing professional accounting ethical values. The AICPA
requires professional accountants to act responsibly when engaging in accounting services
and reviewing sensitive financial information. Accountants should always exercise sound
moral judgment in all accounting activities. Accountants have the unique responsibility to
provide clients with professional services while presenting a truthful and accurate assessment
of a company's financial health to the general public.

a) Integrity: Integrity requires accountants to be honest, candid and forthright with a client's
financial information. A professional accountant should be straightforward and honest in all
professional and business relationships. Accountants should restrict themselves from personal
gain or advantage using confidential information. While errors or differences in opinion
regarding the applicability of accounting laws do exist, professional accountants should avoid
the intentional opportunity to deceive and manipulate financial information. Public

15 | P a g e
accounting firms or private companies often develop a code of ethics or conduct for
accountants. In the absence of specific rules or standards, accountants should review their
actions to ensure they are following commonly accepted principles.

b) Objectivity and Independence: Objectivity and independence are important ethical

values in the accounting profession. A professional accountant should not allow bias, conflict
of interest or undue influence of others to override professional or business judgments.
Failure to remain objective and independent may hamper an accountant's ability to provide an
honest opinion about a company's financial information. Objectivity and independence are
also important ethical values for auditors. The accounting industry usually limits the number
of services public accounting firms or individual certified public accountants (CPA) can offer
clients. Accounting services include general accounting, auditing, tax and management
advisory services. Accountants who perform more than one of these services for a client may
compromise their objectivity and independence. to hide a company's negative financial
information.

c) Due Care: Due care is the ethical value requiring accountants to observe all technical or
ethical accounting standards. Professional accountants are often required to review generally
accepted accounting principles (GAAP) and apply this framework to a company's specific
financial information. Due care requires accountants to exercise competence, diligence and a
proper understanding of financial information. Competence is usually based on individual's
education and experience. Thus, due care may require senior accountants to supervise and
direct other accountants with less experience in the accounting profession.

d) Confidentiality: A professional accountant should respect the confidentiality of

information acquired as a result of professional and business relationships and should not
disclose any such information to third parties without proper and specific authority unless
there is a legal or professional right or duty to disclose. Confidential information acquired as
a result of professional and business relationships should not be used for the personal
advantage of the professional accountant or third parties.

e) Professional Behavior: A professional accountant should comply with relevant laws and
regulations and should avoid any action that discredits the profession. The principle of
professional behavior imposes an obligation on professional accountants to comply with
relevant laws and regulations and avoid any action that may bring discredit to profession.
This includes actions which a reasonable and informed third party, having knowledge of all

16 | P a g e
relevant information, would conclude negatively affects the good reputation of the profession.

f) Technical Standards

A professional accountant should carry out services in accordance with the relevant technical
and professional standards with care and skill. In addition, they should also conform to
standards set by International Federation of Accountants (IFAC). E.g. International Standards
on Auditing; International Accounting Standard Board – (IASB) e.g. International Financial
Reporting Standards; The member’s professional body or other regulatory body e.g. NBAA

Maintaining ethical standards are necessary in every business entity that intends to survive
successfully in the market and improve total organizational competencies and efficiencies.
Developing total efficiencies of the employees is essential for leading a business entity in the
direction of success continuously. This necessitates training and guiding the employees in
such a way as to build their efficiencies in all the aspects of business while stressing on
maintaining ethical standards effectively at all times. Understanding and upholding business
ethics is essential for overall business activities. So it goes with the accounting profession as
well.

Since the accounting profession involves various functions of accounting, such as, recording
of all business events that are of financial character, classifying and summarizing them and
present them in the form of profit and loss statement, balance sheet and cash flow statement,
the way these activities are performed is very important and it has a lot do with maintaining
accounting ethics of accountants.

One of the most important things that shows ethical behavior of an accountant is that he
needs to remain impartial and loyal to the business organization while performing the related
activities sincerely and in all honesty. Since the accounting information drawn from the
financial statements is of great value and significance to be relied upon and upon which the
success or failure of a business immensely depends, an accountant should not manipulate the
accounting figures in order to hide any information. In terms of balance sheets, the
information concerning, cash, receivables, inventory, prepaid expense, long term receivables
etc must be presented accurately.

17 | P a g e
Similarly, the activities pertinent to the components of income statements, such as, revenues
and expense are to be carried out efficiently. An accountant should not change the accounting
figures to make profits look better on income statement. In this way, accounting professionals
are supposed to provide the accurate information to the top management without changing
the figures showing less expenses or greater revenues.

Hence, the accounting ethics should be applied to each and every activity of the process of
accounting, so that the complete, accurate and reliable information can be presented to the
desired users of financial statements in a business organization.

Q2. Being a professional what should be the ethics in your professional life?

Ans. Our actions affect not only ourselves, but also those around us. Many of our
professional decisions involve ethics. If we tell a lie, we can lose someone’s trust and
undermine our own integrity. If we use shoddy materials or workmanship on the job, we can
jeopardize the safety of others. Questions of morality and ethics can be found at all levels of
society. Ethical behavior is equally important in the workplace as it is in our personal lives.
Everywhere business is conducted, ethics matters. Good Ethics is a fundamental requirement
of any profession. It is integral to the success of the business as well. Ethics is a system of
moral principles governing the appropriate conduct of a person or a group. Maintaining good
ethics is being consistent with the principles of correct moral conduct constantly. Some
common workplace ethics include:

• Being Punctual: Arriving to work on time, adhering to lunch and breaks on time, and
attending scheduled meetings on time.
• Being Responsible: Putting up honest efforts at the workplace and utilizing time to
complete designated tasks and deadlines instead of personal work.
• Dressing Professionally: Being well-dressed and adhering to the company’s dress
code and wearing ID cards.
• Working as One Team: Working well with others, respecting others, and being a
good team player.
• Working with a Positive Attitude: Being pleasant and polite, and take on difficult
tasks with a cheerful attitude.

18 | P a g e
A successful business depends on the trust of various parties—employees, managers,
executives, customers, suppliers, and even competitors. Six ethical terms form the foundation
of trust upon which ethical business practice is built on following:-

a) Ethics: Ethics refers to a set of rules that describes acceptable conduct in society. Ethics
serve as a guide to moral daily living and helps us judge whether our behavior can be
justified. Ethics refers to society’s sense of the right way of living our daily lives. It does this
by establishing rules, principles, and values on which we can base our conduct. The concepts
most directly associated with ethics are truth, honesty, fairness, and equity. While ethics is a
societal concern, it is of critical importance to the professions that serve society. Because
professionals such as physicians, attorneys, engineers, and property and facility managers
provide services that affect our welfare, they develop professional codes of ethics that
establish professional standards for behavior.

Examples of the types of standards found in professional codes of ethics include:

• An attorney or physician maintaining client-patient confidentiality

• An accountant not using client information for personal gain

b) Values: Values are defined as the acts, customs, and institutions that a group of people
regard in a favorable way. Statements of value typically contain words of approval,
disapproval, and obligation. Some of these words might be good, bad, should, and should not.
However, value judgments do not have to contain specific value words.

c) Morals: Morals are a set of rules or mode of conduct on which society is based. Certain
moral elements are universal, such as the laws forbidding homicide and the basic duties of
doing good and furthering the well-being of others.

d) Integrity: To have integrity is to be honest and sincere. Integrity is defined as adhering to

a moral code in daily decision making. When people and businesses possess integrity, it
means they can be trusted. On the other hand, companies that lack this quality and mislead
customers with inferior products or false advertising will suffer the consequences.

e) Character: Ethics is not just how we think and act. It is also about character. Character
drives what we do when no one is looking. Each person has the ability to build, change, or
even destroy his or her own character. A person with character has high morals and will act

19 | P a g e
morally in all situations by choice, not force. A person with character will honor his or her
commitments. Character pertains to organizations, as well. A company with high character is
worthy of trust and respect, acts honestly, and stands by its promises.

f) Laws: The law is a series of rules and regulations designed to express the needs of the
people. Laws protect people from the most blatant and despicable affront to morality, such as
murder, rape, and theft. Laws frequently provide us with a sense of right and wrong and guide
our behavior, but not always. Laws have always had a strong connection to morality, ethics,
and values. But, not all laws are ethical. In business, it is not unlawful to lie to a coworker or
on a job application, but both are ethically wrong.

These six concepts—ethics, values, morals, integrity, character, and laws—form the
foundation of trust upon which ethical business practice is built.

Professional Codes of Ethics

Many professions and corporations have developed codes of ethics to address their unique
business situations. In fact, 90 percent of Fortune 500 companies and nearly half of all
corporations have codes of ethics that can be applied to all employees. By developing a code
of ethics, an organization makes it clear that employees and members cannot claim ignorance
as a defense for unethical conduct.

Benefits of a Corporate Code of Ethics

Codes of ethics help employees strike a balance between the ends and the means used to
obtain them. This balance may be one of the most challenging aspects of being an ethical
organization.

The Federal Sentencing Guidelines for Organizations provide an additional incentive for
having corporate codes of ethics and ethics training. Companies that have made a bona fide
effort to prevent unethical and illegal behavior are likely to receive less severe punishment
should an employee be found guilty of breaking the law. The unethical conduct of just a few
employees can affect an entire corporation.

Benefits of a Professional Code of Ethics

20 | P a g e
A professional code of ethics sets a standard for which each member of the profession can be
expected to meet. It is a promise to act in a manner that protects the public’s well-being. A
professional code of ethics informs the public what to expect of one’s doctor, lawyer,
accountant, or property manager. As long as professionals adhere to these standards, the
public is willing to have their professional associations create and enforce their ethical codes.

In cases where these codes are repeatedly and grossly violated, the public’s likely response is
to demand protective legislation. The Sarbanes-Oxley Act of 2002 was enacted in response to
such violations and the ensuing public outcry. Most professionals would prefer to police
themselves, rather than have an externally imposed set of regulations. That is a major reason
why they create codes of ethics in the first place.

Successful Implementation of a Code of Ethics

Within a corporation, top-down support is critical. If senior management does not act
ethically and support others who do, an organization’s ethical code will have little meaning. It
is critical for managers and executives to:

• act consistently with the company’s ethical standards

• apply those standards in dealing with employees

The importance of ethics in professional life can be evidenced by a number of instances

showing failure of businesses and several scandals. It may be rightly said that the situations
would not have been so worsened had there been observance of ethical standards. Therefore,
maintaining ethical standards is must for the prosperity of an organization as well as the
development of one’s personality. Good ethics will lead us to maintain our honest image. It
will enable us to refrain from such activities that may discredit to our profession. Thus,
adhesion to good ethics is to let our conscience be our guide at all times. Albert Schweitzer
says, “Ethics is the activity of man directed to secure the inner perfection of his own
personality.”

21 | P a g e