The five fundamental principles in daily work
What the IESBA Code's five fundamental principles mean for everyday preparation, tax and audit work, how the Code reaches local rules, and a self-check.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Ethics training in most firms happens once a year, in a room, with slides. The work happens every day, at a desk, with a client on the phone. The five fundamental principles of the IESBA Code are meant to close that gap: short enough to remember, broad enough to cover situations no rule foresaw.
This article takes each principle into the ordinary work of a firm that prepares statements, does tax and audits.
The five principles in plain words
The IESBA Code's five fundamental principles are integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour.
- Integrity. The IESBA defines it as being straightforward and honest in professional and business relationships.
- Objectivity. In practice: not letting bias, a conflict of interest or pressure from anyone override professional judgement.
- Professional competence and due care. In practice: knowing enough to do the work properly, and doing it carefully and on time.
- Confidentiality. In practice: treating what the firm learns about a client as the client's, and not using or passing it on improperly.
- Professional behaviour. The IESBA describes it as complying with laws and regulations and avoiding conduct that discredits the profession.
How the Code reaches local rules
The IESBA states that its Code establishes a principles-based framework of ethical requirements and independence standards for professional accountants and assurance practitioners worldwide. It says the Code is adopted, used or referenced in more than 130 jurisdictions, including 18 of the G20 economies.
How it reaches a particular accountant depends on the country. The IESBA explains that the Code may be adopted through legislation or regulation, issued or converged with by independent national standard setters, or implemented by professional bodies as local standards based on or aligned with it. It adds that the degree and type of enforcement depend on each jurisdiction's legal and regulatory framework.
So the practical step is to know which code binds you. Check which code your own regulator or professional body applies (for example IRBA or SAICA in South Africa, FRC Nigeria or ICAN in Nigeria, ICPAK in Kenya), and whether it adds local requirements to the IESBA text.
The principles at work
Preparing statements
Integrity is tested when a client wants the bank to see a better picture than the books support. Competence is tested when the year includes a transaction the preparer has never handled. Professional behaviour is tested when a client asks for a document to be dated earlier than it was signed.
Tax work
Objectivity is tested when one route would earn the firm a larger fee than another. Confidentiality is tested when a client's competitor, also a client, asks a casual question about how business is going in the industry.
Audit
Every principle applies, with independence on top. Objectivity is tested whenever the firm also provides other services to the audit client, a subject covered in non-audit services for audit clients. Competence and due care are tested by every sampling decision and every review note.
The principles also reach the firm's own marketing. A newsletter or website form must be honest and must not discredit the profession, as discussed in ethical marketing e-mails and forms.
Records in Achekam that support the principles
Software cannot make anyone ethical, but it can make a firm's ethical decisions visible. Two records in Achekam bear on particular principles:
- Objectivity and independence. Under Quality & Governance, Independence & Conflicts, staff record annual independence declarations and any interest, relationship or gift involving a client, and anyone can check whether a person has an active independence exception for a client.
- Confidentiality. Partners and administrators can restrict a client, or a single engagement, to named people with a reason (Settings, Users & roles, "Access to clients"). A restriction is lifted rather than deleted, and who did what and when is recorded. The account manager and the engagement's partner and manager can always open it. This suits a client who is a staff member's relative, a sensitive investigation, or a client whose competitor is also on the books.
When a principle and a client request collide
The hardest moments come when a client asks for something reasonable-sounding that a principle forbids. A director wants a shareholder loan shown as long-term because the bank prefers it. An owner wants the firm to reassure a supplier, also a client, that a third client is good for credit.
The approach is the same each time. Name the principle at stake, explain it to the client in plain language, offer what the firm can properly do, and record the conversation. If the client insists, the firm considers whether it can continue at all.
A quick self-check
Before acting on any unusual request, ask:
- Is what I am about to say or sign straightforward and honest?
- Would I do the same for a client whose fees did not matter to the firm?
- Do I know enough to do this properly, and have I taken enough care?
- Am I using or sharing this information only in the way the client would expect?
- Would I be comfortable if this decision were described to the regulator?
The IESBA's page on the International Code of Ethics introduces the five fundamental principles and the conceptual framework for addressing threats in the board's own words.
The principles are short for a reason. A partner who can recite them, and a junior who has seen them applied to a real file, will make better calls than a firm with a long manual that nobody opens.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
