Proposed changes to 'professional behaviour' provisions in ICAEW Code of Ethics

This consultation is likely to be of interest to all ICAEW members, ICAEW member firms and regulated firms, accountancy and legal sector regulators and ICAEW's oversight regulators. 

Please respond using the online form or post your response to ICAEW Regulatory Practice and Policy Team. Details are provided under the section: Responding to the consultation.

We are committed to ensuring our decisions are appropriate, proportionate and evidence-based. The purpose of this consultation is to provide an opportunity to consider the proposed changes to the wording of ICAEW provisions under the fundamental principle of professional behaviour in sub-section 115.1 A2 of the ICAEW Code of Ethics (ICAEW Code).

We use consultations to ensure that we consider the views and experiences of all our stakeholders. There are eight questions for you to consider, and we also welcome your general comments on any aspect of the proposed changes.

Our role as an improvement regulator is to strengthen trust in ICAEW Chartered Accountants and firms. We do this by enabling, evaluating, and enforcing the highest standards of ethical behaviour in the profession.

Professional accountants are expected to demonstrate the highest standards of professional behaviour. They must uphold values of integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. This is because they play a key role in ensuring public trust in financial reporting and business practices and maintaining the reputation of the accountancy profession.

The current version of the ICAEW Code has been in place since 1 January 2020. It sets out the fundamental principles of ethical behaviour expected of all professional accountants and reflects the profession's duty to act in the public interest. It does this by defining our values, and the standards of behaviour expected of those who represent it. The ICAEW Code applies to all professional and business activities, whether remunerated or voluntary.

There are five fundamental ethical principles which guide behaviour:

1. Integrity
2. Objectivity
3. Competence
4. Confidentiality
5. Professional behaviour

These principles set out the standard of behaviour expected of a professional accountant. Members are responsible for assessing threats to complying with these principles and for implementing safeguards where threats are significant.

Professional accountants are accountable for their actions and failure to follow the ICAEW Code may result in a member becoming subject to disciplinary action.

The fifth ethical principle sets out that professional accountants should 'comply with relevant laws and regulations and avoid any conduct that the professional accountant knows or should know might discredit the profession.'

• Access the current version of sub-section R115.1

It includes the following provisions:

IESBA

As a member of the International Federation of Accountants (IFAC), ICAEW adopts the International Code of Ethics for Professional Accountants published by the International Ethics Standards Board for Accountants (IESBA). There is also ICAEW add-on material which provides additional requirements and guidance for UK-specific issues.

We are obliged to adopt the IESBA Code in full and are not permitted to change its provisions, only add to them. However, sub-section 115.1 A2 is ICAEW add-on material and therefore we can change or add to this material if we consider changes are required.

In addition to the changes we are considering to sub-section 115.A2, IESBA itself has already identified, within its project looking at the 'Role and Mindset of Professional Accountants', the need for changes to the Code, including a change to the fundamental principle of professional behaviour. The change from the IESBA project is to include some additional text to R115.1 as highlighted below:

This additional text will be incorporated into the ICAEW Code as part of the next update, likely to take place in the second quarter of 2024.

While the new specific reference to acting in the public interest may be welcomed, we do not believe that it assists with the interpretation of what are appropriate or inappropriate behaviours of members, either within the workplace or outside of the workplace. The change is a general statement that does not reference any specific types of behaviour. We therefore consider that further changes are required in addition to the IESBA change to R115.1.

The proposed amendments to the provisions under the fifth fundamental ethical principle, professional behaviour, are as follows:

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.

Proposed new wording
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.

Purpose of the proposed changes

Our proposed changes are intended to update and strengthen the principle of professional behaviour and clarify the standards of behaviour that are expected of a professional accountant.

We consider that they will achieve the following benefits in the public interest to:

• encourage high standards of ethical behaviour;
• strengthen trust in Chartered Accountants;
• promote a more inclusive Chartered Accountancy profession;
• protect the health and wellbeing of the Chartered Accountancy profession; and
• clarify the circumstances in which a member may be liable to disciplinary action.

We want to make it clear to those subject to the ICAEW Code that they must treat all those they encounter in professional and business relationships fairly, with respect, and not harass, bully, or unfairly discriminate against them. This is because:

• unfair or inappropriate treatment can affect the health and wellbeing of colleagues and impact on their ability to practise. This in turn can also have an impact on the quality of services received by consumers;
• unfair or inappropriate treatment can also mean that those who may not be competent are put in positions of responsibility, rather than being appointed on merit;
• incidences of bullying behaviour in the workplace or related environments can influence ethical behaviour. For instance, it could lead to covering up mistakes or acts of dishonesty, rather than being open and transparent; and
• unwelcome and inappropriate conduct by colleagues in professional or work-related environments or on social media is highly damaging to victims, the profession, and its reputation.

By making our expectations around professional behaviour clear, we hope that this will also help others to raise concerns about unethical behaviour or identify inappropriate practices. This will allow us to take appropriate action, if necessary, when we receive complaints or otherwise become aware of the conduct.

Q1. Do you agree with the proposed amendment to sub-section 115.1 A2? Please explain the reasons for your answer.

'The standards that society expects'

In defining our expectations of the professional standards of our members (and all who are subject to the ICAEW Code), we have carefully considered how we can ensure the standards achieve appropriate outcomes. We propose to replace the existing reference to 'courtesy and consideration' with the broader concept of the 'standards that society expects'.

Courtesy and consideration are important values for professional accountants. However, they are narrow concepts that do not capture all the types of behaviour we consider are important for Chartered Accountants.

Defining standards of ethical behaviour with reference to the shared social norms that members of a society understand and accept, provides increased flexibility and clarity. It emphasises that professional behaviour must meet the objective expectations of a professional member of society. This also allows for prevailing societal attitudes to be considered, both over time and with reference to the location an individual lives and works in.

The concept of the standards that society expects is intended to encourage members to use their professional judgement to reflect on how they should be behaving. In terms of disciplining poor conduct, it allows our Conduct Committee and Disciplinary Tribunals to apply their judgement on whether a member's conduct is sufficiently far from the standards that society would expect of a professional. Rather than focusing on the narrower concept of courtesy and consideration.

Q2. Do you agree with the inclusion of the concept 'the standards that society expects'? Please provide any additional comments or details of concerns.

'In all professional and business relationships'

We want to clarify the circumstances and situations in which members, and all who are subject to the ICAEW Code, need to be cognisant of their professional behaviour. The existing wording of 'in all whom they come into contact when performing their work' could imply that high standards of professional behaviour are only required when directly performing client work. However, the ICAEW Codes applies in all aspects of a member's professional life.

The wording 'professional and business relationships' is intended to explain that a member's conduct in broader contexts such as work-related events, or on social media, is relevant to their professional body, as well as in the workplace. The term 'professional and business relationships' does, however, place a boundary by not straying into matters wholly in a member's private life.

It is important to note however that conduct of a criminal nature would always be of disciplinary interest to ICAEW as a professional body, and the ICAEW Code requires members to comply with all relevant laws and regulations. This is the case whether the conduct is wholly in a member's private life, or not.

Clarifying the scope of the professional behaviour provisions in the ICAEW Code will ensure it highlights the types of poor behaviour that should be reported to our Conduct Department. This will also bring our rules on professional conduct in closer alignment to those imposed by other regulators (see Appendix). This sends a clear message that poor professional conduct is not acceptable in any forum, without straying too far into a member's private life.

Q3. Do you agree with the proposed scope of 'professional and business relationships'? Please provide any additional comments or details of concerns.

Q4. Do you have any comments on the wording or any suggested amendments? Please provide any additional comments or details of concerns.

'For example, professional accountants should treat others fairly, and with respect, and not harass, bully, or unfairly discriminate against them'

Professional accountants have an important role in promoting an ethical culture. We want to ensure that professional accountants clearly understand the expectations that come with their professional role.

The proposed inclusion of examples in the Code aims to explain what the expectations are in terms of professional behaviour by ICAEW members and others subject to the ICAEW Code. This wording also covers many of the types of poor behaviour that are reported to ICAEW's Conduct Department. However, while the list of examples is intended to highlight some relevant types of inappropriate behaviour, it is not overly prescriptive or exhaustive. This means that ICAEW can address seriously poor conduct of any kind that takes place in a professional or business context and ensure consistency in regulatory and disciplinary outcomes.

As part of the implementation of the proposed changes to sub-section 115.1 A2, further guidance or definitions would be provided for the examples of behaviour listed above.

Q5. Do you think the examples sufficiently capture the types of behaviour and concerns relevant to a modern profession? Please explain why.

Q6. Do you have any suggested changes to the list of proposed examples?

Regulatory impact

We do not consider that these proposals will impose significant further costs or have an onerous regulatory impact on members or firms.

By being clear about the standards of behaviour that are expected of Chartered Accountants we will promote further transparency and consistency in member conduct.

This change may encourage new self-reports and complaints to be submitted. We act in the public interest, and it is part of our role to ensure our members and member firms act with integrity and to the highest standards. We will consider all complaints in accordance with our disciplinary processes.

Some firms may have to introduce new policies and procedures to ensure colleagues are aware of our expectations. However, it is our view that firms should already be taking reasonable steps to ensure that colleagues are treated fairly. If this is not the case, then our rules will encourage these firms to take active steps to prevent unfair and inappropriate conduct.

Equality and diversity impact assessment

We do not consider that these proposals will result in a negative or disproportionate impact on protected groups or on diversity and inclusion, but consultees may have different insights.

The changes clarify the behaviour we all expect as members of society to promote and support equality, diversity, and inclusion in practice. Stating our expectations about treating others fairly and with respect provides a clear message about our shared values as a profession. This should have the positive effect of fostering an inclusive and diverse profession.

We will consider any consultation feedback relating to diversity and inclusion impacts and will continue to monitor and respond to any emerging impacts.

Q7. Do you feel that the proposed changes outlined in this consultation could have an impact on matters relating to equality, diversity or inclusion? If so, please provide any additional comments or details of concerns.

Q8. Do you have any other general comments on the proposed changes to the ICAEW Code of Ethics provisions on professional behaviour?

Consultation closed 9 February 2024

You can respond to the consultation by completing the online form.

• Consultation closed 9 February 2024
• Access the printable PDF document of the consultation

Or post your response to ICAEW Regulatory Practice and Policy Team, Professional Standards Department, Metropolitan House, Avebury Boulevard, Milton Keynes MK9 3FS.

Next steps

Once the consultation closes, we will analyse the responses. They will be considered before deciding on our next steps. Any proposed changes to the ICAEW Code will be put to ICAEW Council for approval.

If responses are published and/or specific feedback is referenced following this consultation, we will not attribute any comments to individuals nor identify individual respondents. Responses are kept anonymous.

ICAEW Council is the body with responsibility to approve changes to the ICAEW Code, with detailed responsibility delegated to the Ethics Standards Committee. ICAEW's oversight regulators may also need to consider and approve any changes to our regulatory arrangements in advance of such changes coming into effect.

Professional behaviour: approach in other professions

• You can also view this Appendix in full by accessing the printable PDF document of the consultation