Safeguards Against Threats
Framework for Responding to Threats
Professional accountants should apply a code in relation to fundamental principles as follows:
- Identify threats to compliance with the fundamental principles
- Evaluate the significance of the threats identified
- Apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable level
Types of Safeguards
Safeguards Created by the Profession, Legislation or Regulation
- Education, training and experience requirements for entry into the profession
- Continuing professional development (CPD)
- Corporate governance regulations
- Professional standards
- Professional or regulatory monitoring and disciplinary procedures
- External review of work by a legally empowered third party (audit)
Safeguards in the Work Environment — Accountant in Business
- Employer's systems and structures
- Employer's ethics and conduct programme
- Recruitment of high-calibre, competent staff
- Internal controls
- Disciplinary procedures
- Leadership focusing on ethical behaviour
- Policies and procedures for employee performance
- Communication of policies to staff, including training and education
- Policies for employees to discuss ethical issues with senior colleagues
- Consultation with another appropriate professional
Safeguards in the Work Environment — Accountant in Public Practice
- Emphasising the importance of complying with fundamental principles
- Expectation on staff to act in the public interest
- Policies to implement and monitor work quality
- Policies to ensure compliance with fundamental principles
- Policies to identify threats to compliance
- Identification of interests or relationships between staff and clients
- Different staff used for separate aspects of a client's work
- Ensuring staff not involved in a client's work cannot influence decisions
- Senior manager overseeing quality control
- Staff to consult with senior colleagues over compliance issues
- Appropriate disciplinary mechanisms
Role of the Accountant in Public Practice
A professional accountant in public practice shall not knowingly engage in any business, occupation or activity that impairs or might impair integrity, objectivity or the good reputation of the profession — and which would therefore be incompatible with the fundamental principles.