Study Notes: SAICA Code of Professional Conduct

Study Unit 6: Introduction to the SAICA Code of Professional Conduct

The SAICA Code of Professional Conduct is primarily based on international standards, particularly

the International Code of Ethics for Professional Accountants issued by the International Ethics

Standards Board for Accountants (IESBA). It outlines the ethical standards that accountants,

particularly those affiliated with SAICA, must adhere to in both business and public practice.

1. The Nature and Role of a Profession

- Definition: A profession is a vocation requiring specialized knowledge and skills, typically regulated

through systems of education and competence assessments.

- Professional Bodies: They regulate entrance, set technical and ethical standards, administer

registration, and ensure accountability. Examples include SAICA, CIMA, and ACCA.

- Public Responsibility: Professionals are expected to act in the public interest, maintain integrity,

and uphold societal trust.

2. Fundamental Principles of the SAICA Code

These principles represent the core values guiding professional accountants:

- Integrity: Accountants must be straightforward, honest, and ensure fair dealings in all business and

professional relationships.

- Objectivity: Avoid bias, conflict of interest, or undue influence from others that may affect

professional judgment.

- Professional Competence and Due Care: Maintain professional knowledge and skills, and provide

diligent service in accordance with technical and professional standards.

professional relationships without proper authority.

- Professional Behaviour: Avoid actions or conduct that could discredit the profession.

3. Conceptual Framework

- Purpose: The conceptual framework helps accountants identify, evaluate, and address threats to

compliance with the fundamental principles.

- Steps:

- Identify threats such as self-interest, self-review, advocacy, familiarity, and intimidation.

- Evaluate the significance of these threats.

- Apply safeguards to eliminate or reduce the threat to an acceptable level.

Part 1: Fundamental Principles and Conceptual Framework

1. Integrity (Section 111)

- Requirements: Do not associate with any misleading, false, or reckless information. Take steps

to disassociate if found in breach.

- Practical Examples: Keeping promises, being honest in financial reporting, and not gossiping.

2. Objectivity (Section 112)

- Requirements: Ensure independence in judgment without bias. Do not let personal relationships

or circumstances influence professional decisions.

- Practical Examples: Avoid preparing financial statements with preset profit goals or assessing

employees unfairly due to personal biases.

3. Professional Competence & Due Care (Section 113)

tasks for which you are competent.

- Practical Examples: Ensuring you have adequate resources and time for projects, seeking

additional training when necessary.

4. Confidentiality (Section 114)

- Requirements: Do not disclose information obtained through professional relationships without

proper authority unless legally required.

- Exceptions: Legal permissions, client authorization, and public duty (such as IRBA review).

5. Professional Behaviour (Section 115)

- Requirements: Accountants should comply with laws and regulations, avoid discrediting the

profession, and ensure honesty in self-promotion.

Part 2: Professional Accountants in Business

This section explains how the conceptual framework applies to professional accountants in

business, focusing on various areas such as conflict of interest, financial interests, inducements, and

reporting of information.

1. Conflict of Interest (Section 210)

- Overview: A conflict of interest arises when an accountant has competing interests in the same

matter for multiple parties or has a personal interest that compromises objectivity.

- Safeguards: Disclosure of interests, segregation of duties, and withdrawal from the

decision-making process.

- Examples: Preparing financial information for two conflicting parties or selecting a vendor when a
family member benefits from the transaction.

2. Preparation and Reporting of Information (Section 220)

- Overview: Information prepared by accountants must be accurate, fair, and in compliance with

laws and regulations. Misleading reporting is strictly prohibited.

- Safeguards: Implementation of strong internal controls, supervision by an executive, and review

by audit committees.

- Threats: Pressure to manipulate financial results or to provide misleading financial data.

3. Acting with Sufficient Expertise (Section 230)

- Overview: Accountants must not overstate their qualifications or fail to seek assistance when

necessary. Inadequate expertise may result in incompetence and breach of the duty of care.

- Examples: Performing tasks with insufficient information or training, which could compromise the

quality of work.

4. Financial Interests, Compensation, and Incentives (Section 240)

- Overview: Financial interests, including bonuses and incentives tied to company performance,

may create self-interest threats that compromise integrity.

- Safeguards: Disclosure of financial interests, independent committee review of compensation,

and education on ethical issues.

5. Inducements (Section 250)

- Overview: Accountants or their family members may be offered inducements such as gifts or

preferential treatment that threaten objectivity and professional behaviour.

- Safeguards: Documenting inducement offers, rejecting offers, and informing management or

those charged with governance.

- Overview: Accountants must act when encountering non-compliance with laws and regulations,

including fraud, money laundering, or data protection breaches.

- Safeguards: Internal reporting, whistleblowing policies, and legal counsel.

7. Pressure to Breach the Fundamental Principles (Section 270)

- Overview: Accountants should not succumb to pressure that forces them to compromise ethical

standards.

- Examples: Pressure to manipulate financial reports, reduce the extent of work, or approve

unjustified expenditures.

Safeguards for Addressing Threats

Safeguards are critical to reducing threats to compliance with the fundamental principles. Broad

safeguards in a work environment include:

- Strong internal controls and corporate oversight.

- Ethics and conduct programs.

- Training programs for employees to foster ethical behaviour.

- Policies for reporting ethical concerns without fear of retaliation.