Updated wording was shared with, and approved by, ICAEW Council in June 2024. Changes will be incorporated into paragraph 115.1 A2 in the ICAEW Code of Ethics in the first quarter of 2025 and practical examples will be included in the guidance.
Updated wording for 2025
Current wording
115.1 A2 The concept of professional behaviour implies that it is appropriate for professional accountants to conduct themselves with courtesy and consideration towards all with whom they come into contact when performing their work.
Wording proposed in consultation
115.1 A2 The concept of professional behaviour implies that professional accountants should act in accordance with the standards that society expects in all professional and business relationships. For example, professional accountants should treat others fairly, and with respect, and not harass, bully, or unfairly discriminate against them.
Approved new wording
115.1 A2 A reasonable and informed third party would expect that a professional accountant, in their professional life, treats others fairly, with respect and dignity and, for example, does not bully, harass, victimise, or unfairly discriminate against others.
Below, read the summary of the feedback we received and find out how we arrived at the final wording.
Summary
ICAEW consulted on proposed changes to the fundamental principle of professional behaviour in sub-section 115 of the ICAEW Code of Ethics. The consultation ran for ten weeks from 1 December 2023 to 9 February 2024 and a summary of the results is shown below.
A total of 71 responses were received from a range of individual members, firms and other organisations. Only 41% of respondents supported the proposed new wording, but many respondents indicated they were in favour of the intent of the revision.
Most respondents who opposed the change had concerns about specific aspects of the wording. Respondents voiced particular concern about the phrase the ‘standards that society expects’. Several respondents were concerned that the phrase; ‘all professional and business relationships’ could be interpreted in different ways, some of which could inadvertently narrow the provision from the current wording of 'all with whom they come into contact when performing their work'.
Respondents who were strongly in favour of the changes welcomed the paragraph’s improved clarity and felt that it successfully modernises the current provisions. There was also support for providing examples which clarify what would be considered unacceptable behaviour by an accountant, in particular bullying and harassment.
A small number of respondents considered that the revisions to paragraph 115.1 A2 were unnecessary, for example, because of new International Ethics Standards Board for Accountants (IESBA) provisions, or because the existing provisions were sufficient.
Detailed comments on the proposed wording
We asked respondents to comment on three aspects of the proposed wording detailed above, and the common themes and our responses to the feedback are below:
1. The standards that society expects
- Most respondents did not approve of the concept ‘the standards that society expects’ and considered it was too vague and subjective. In particular, there were concerns that accountants are to be judged by the court of public opinion.
- There were also comments that different parts of society have different standards, and some parts of society think it is perfectly acceptable to under-declare taxable income, but this is not the standard we would expect members to be judged by.
- Some respondents suggested changing the test to a ‘Reasonable and Informed Third Party’ which already features in the Code. There was a comment that this test would be able to take into account the extent to which an accountant should be expected to keep up with the mood and expectations of society.
Our response
We reflected on the concerns raised and concluded that reference to ‘the standards that society expects’ should be replaced with ‘a reasonable and informed third party would expect’. This provides greater consistency as it is already used in the Code. A 'reasonable and informed third party' should possess the knowledge and experience to evaluate the appropriateness of a professional accountant’s conclusions objectively and impartially.
2. Professional and business relationships
- Many respondents (60%) welcomed the inclusion of the language ‘professional and business relationships’ as it makes to clear to members that they are required to behave with professionalism in all professional contexts and not just during client-facing engagements.
- However, it is clear from the responses that there was widespread misunderstanding about the scope of ICAEW's Disciplinary Bye-laws and a belief that the new wording would exclude the application of the Disciplinary Bye-laws from anything which happened entirely in a member's private life. This was not the intention. The proposed 115.1 A2 sets out what is expected of a member in their professional life as a whole. This includes with colleagues out of the workplace.
Our response
We concluded that a different phrase was needed to explain the intention for this provision to apply to all aspects of a member’s professional life. The term ‘professional life’ has been agreed as a replacement.
Accompanying explanatory guidance will explain that this means any conduct that takes place in your working life or is connected to your working life in some way. For example, it could mean if conduct involves colleagues or clients, or if the member is identifying themselves as a Chartered Accountant when they use social media, even outside of office hours.
Conduct entirely in a member’s private life may still lead to a potential liability to disciplinary action but only if it is so seriously poor that it brings discredit to the member or the profession under R115.1 (c) which requires members to ‘avoid any conduct that they know or should know might discredit the profession’. This is a higher hurdle which will be met only by something like a criminal conviction or seriously offensive conduct.
3. Incorporating specific examples of behaviour
- There was general support for the provision of a list of examples of unacceptable behaviour, particularly in terms of bullying and harassment. Respondents indicated, however, that care should be taken to ensure that this does not appear to be an exhaustive, overly prescriptive or entirely negative list. Some respondents recommended including additional wording such as ‘dignity’ and ‘respect’. Overall, respondents found the concept of examples helpful.
- Some respondents also commented that the proposal successfully broadens the narrow scope of the phrase: ‘courtesy and consideration’ which some considered to be a lower standard than that required by other professions. However, there were mixed responses to its removal, with some respondents who favoured retaining 'courtesy' and in particular 'consideration' as a broad, generally-accepted standard that expresses thoughtfulness of others.
Our response
In response, we concluded that the inclusion of examples provides helpful clarity for members of what our expectations are in terms of professional behaviour. We agree that the application material should refer to both positive and negative behaviours and that there should be a non-exhaustive list of examples.
The word ‘dignity’ was included as it was advocated by consultation respondents and is a term which exists in other codes of conduct. The word ‘respect’ as a positive behaviour was maintained. Encouraging respectful interactions with others can help to prevent and address incidences of bullying and harassment. However, guidance will be provided to explain what this does (and does not) mean for members.
Next steps
We are developing explanatory supporting guidance to accompany the changes to the Code, and this will be published when the changes come into effect in the first quarter of 2025. Guidance will include practical examples and case studies illustrating behaviours that would and would not be of disciplinary interest to ICAEW. This will help members to understand what types of behaviours would constitute poor conduct that could lead to disciplinary action.