CHAPTER 5

CODE OF ETHICS
FOR THE
PROFESSIONAL ACCOUNTANTS
IN THE PHILIPPINES

Ethics and Professional

Ethics defined
Ethics is a branch of
philosophy that deals with
the study of the rightness
or wrongness of human
actions.

Professional Ethics are

imposed by a profession on its
members, who voluntarily
accept standards of
professional behavior more
rigorous than required by law.

Why is code of
ethics important
for a profession?

The need for professional ethics

Responsibility to serve the public
Complex body of knowledge
Standards of admission to the profession
Need for public confidence

Why people act

unethically?
Personal ethical
standards differs

Choice to act
selfishly

Rationalizing Unethical Behavior

Everybody does it

If its legal, Its ethical

Likelihood of
discovery and
consequences

Characteristics associated with

ethical behavior
Promise
Promise
Keeping
Keeping

Honesty
Honesty

Integrity
Integrity

Loyalty
Loyalty

Caring
for
Caring for
Others
Others

Fairness
Fairness

Respect
for
Respect for
Others
Others
Pursuit of
Excellence

Responsible
Citizenship

Accountability

The Revised Code of

Ethics for the
Professional
Accountants in the
Philippines

IFAC

IESBA CODE

PICPA

PHILIPPINE
CODE

BOD-PICPA
BOA
PRC

Based on revised 2010 and 2012 Code of Ethics for Professional Accountants by
IFAC.
Applicable on or after Jan 1, 2013.
Paragraphs 290.14 to 290.26 are applicable on or after Jan 1 2014.

What are the contents of the code?

PART A - General
Application of the
IESBA Code
PART B - Professional
Accountants in Public
Practice
PART C - Professional
Accountants in
Business

PART A - General Application of the IESBA Code

to?
w
Ho

Identify threats to compliance with

the fundamental principles.
Evaluate the significance of the
threats identified.
Apply safeguards, when necessary,
to eliminate or reduce threats to an
acceptable level.

PART A - General Application of the IESBA Code

Threats

Self-interest threat

Self-review threat
Advocacy threat
Familiarity threat
Intimidation threat

PART A - General Application of the IESBA Code

Safeguards
Safeguards created
by the profession,
legislation or
regulation

Safeguards in the
work environment

PART A - General Application of the IESBA Code

Conceptual
Framework
Approach

PART A - General Application of the IESBA Code

Ethical
Conflict
Resolution

PART A - General Application of the IESBA Code

Integrity

Fundamental
Objectivity
Professional
Competence
and Due Care

Principles

Confidentiality

Professional
Behavior

PART B Professional
Accountants in Public Practice
Before accepting
a new client

Professional
Appointment

Before accepting a
client engagement

Changes in
Professional
Appointment

PART B Professional
Accountants in Public Practice

Conflict of Interest
Safeguards:
Notify relevant parties (client, firms client, other relevant parties).
Use separate engagement teams.
Information security.
Clear guidelines for members of the engagement team.
Confidentiality agreements.
Regular review of safeguards application by senior individual not
related to the client engagements.

PART B Professional
Accountants in Public Practice

Second Opinions

PART B Professional
Accountants in Public Practice

Fees and Other

Types of
Remuneration

Rec
refe eive a
rral
f ee

ent
g
n
i
t
Con es
fe

Pay a
referral fee

PART B Professional
Accountants in Public Practice

Make exaggerated

Marketing
Professional

Services

claims for services offered,

qualifications possessed, or
experience gained.

Make disparaging

references or unsubstantiated
comparisons to the work of
another.

PART B Professional
Accountants in Public Practice

Gifts and Hospitality

PART B Professional
Accountants in Public Practice

Custody of Client
Assets

PART B Professional
Accountants in Public Practice

Objectivity All Services

PART B Professional
Accountants in Public Practice

Section 290
Independence
Audit and Review
Engagements

PART B Professional
Accountants in Public Practice

Conceptual
Approach to
Independence

Independence of Mind

Independence in
Appearance

PART B Professional
Accountants in Public Practice

Network and
Network Firms

PART B Professional
Accountants in Public Practice

Public Interest
Entities

PART B Professional
Accountants in Public Practice

Related Entities

PART B Professional
Accountants in Public Practice

Those Charged
with Governance

PART B Professional
Accountants in Public Practice

Documentation

PART B Professional
Accountants in Public Practice

Engagement Period

PART B Professional
Accountants in Public Practice

Mergers and
Acquisitions

PART B Professional
Accountants in Public Practice

Financial Interest

PART B Professional
Accountants in Public Practice

Loans and
Guarantees

PART B Professional
Accountants in Public Practice

Business
Relationships

PART B Professional
Accountants in Public Practice

Family and Personal

Relationship

PART B Professional
Accountants in Public Practice

Employment with
an Audit Client

PART B Professional
Accountants in Public Practice

Temporary Staff
Assignments

PART B Professional
Accountants in Public Practice

Recent Service with

an Audit Client

PART B Professional
Accountants in Public Practice

Serving as a Director
or Officer of an
Audit Client

PART B Professional
Accountants in Public Practice

Long Association of
Senior Personnel
(Including Partner
Rotation) with an Audit
Client

PART B Professional
Accountants in Public Practice

Provision of NonAssurance Services

to Audit Clients

PART B Professional
Accountants in Public Practice

Fees

PART B Professional
Accountants in Public Practice

Compensation and
Evaluation Policies

PART B Professional
Accountants in Public Practice

Gifts and Hospitality

PART B Professional
Accountants in Public Practice

Actual or Threatened
Litigation

PART B Professional
Accountants in Public Practice

Assurance
Engagements

PART B Professional
Accountants in Public Practice

Assertion-based
Assurance
Engagements

PART B Professional
Accountants in Public Practice

Direct Reporting
Assurance
Engagements

PART B Professional
Accountants in Public Practice

Multiple
Responsible Parties