1. The Power of One / The Fundamental Ethics Principles Anton Colella, ICAS, CEO James Barbour, ICAS, Director, Technical Policy IESBA 16 March 2016, Madrid

2. © Copyright ICAS 2011 The Power of One / The Fundamental Ethics Principles Content 1Background 2The Power of One 3Fundamental Ethics Principles 4Questions

3. © Copyright ICAS 2011 1. Background – Introduction  ICAS Code of Ethics is substantively based on the IESBA Code of Ethics  There is certain additional Consultative Committee of Accountancy Bodies (CCAB) specific content  Auditors in the UK need to comply with the Financial Reporting Council (FRC) Ethical Standards for Auditors  Most ICAS members are professional accountants in business

4. © Copyright ICAS 2011 1.Background – ICAS Research 2008  What do you do now? Ethical Issues Encountered by Chartered Accountants - Dr David Molyneaux (2008)  Identified ‘the essential but unstated principle of ‘ethical courage’  Follow up paper – ‘Shades of Grey’ published in 2010  Objective – To bring “ethics” to life! https://www.icas.com/technical-resources/ethical-issues-encountered-by-chartered-accountants https://www.icas.com/__data/assets/pdf_file/0011/2009/F8004-ICAS-Shades-of-Grey-Ethical-Dilemmas.pdf

5. © Copyright ICAS 2011 2. The Power of One – Personal Responsibility  In recent years ICAS started a project looking at corporate values  It became clear that the real issue was personal values  Various reports into the financial crisis identified that there had been a lack of personal responsibility and ethical leadership e.g. UK Parliamentary Commission on Banking  The need was therefore to focus on the individual and also on the culture of organisations

6. © Copyright ICAS 2011 2. The Power of One – Key Messages  Personal responsibility, ethical leadership and moral courage.  A well earned reputation can be lost in a very short space of time.  ICAS recognises the power of every individual CA – “The Power of One” – to influence those around them.The Power of One  Cumulative effect can help reinforce the importance of ethics at the core of business practices and of a more responsible and holistic approach to business.  In this way, CAs are a key component of building public trust in business, to the benefit of our broader society. https://www.icas.com/ethics/the-power-of-one

7. © Copyright ICAS 2011 3. Fundamental Ethics Principles  Noted that IESBA was making revisions to the existing fundamental principles in isolation  We believed there was a need to review the fundamental principles as a whole  ICAS undertook a review of the fundamental ethics principles  Found that they were generally fit for purpose but believed that changes were required

8. © Copyright ICAS 2011 3.Fundamental Ethics Principles – Proposed Changes ICAS’ proposed changes to the current principles are: 1The introduction of the new principle of "moral courage” 2A greater focus on personal responsibility, ethical leadership and public interest responsibilities 3Highlighting the need for "ethical judgements” 4The adoption of the International Ethics Standards Board for Accountants' recent proposal relating to the principle of professional behaviour (“conduct” rather than “action”)

9. © Copyright ICAS 2011 3.Fundamental Ethics Principles – Moral Courage New proposed principle  “To exhibit fortitude and determination to exert professional scepticism, to challenge others who are behaving inappropriately, and to resist the exploitation of professional opportunity for private benefit rather than the public interest.”

10. © Copyright ICAS 2011 3.Fundamental Ethics Principles - Objectivity Proposed revised principle To not allow bias, conflict of interest or undue influence of others to override professional or business judgements, and having the resolve to ensure those judgements are ethical.

11. © Copyright ICAS 2011 3.Fundamental Ethics Principles - Confidentiality Proposed revised principle “To respect the confidentiality of information acquired as a result of professional and business relationships and, therefore, not disclose any such information to third parties without proper and specific authority, unless there is a legal, professional, or ethical right or duty to disclose, nor use the information for the personal advantage of the professional accountant or third parties.”

12. © Copyright ICAS 2011 3.Fundamental Ethics Principles – Professional Behaviour Proposed revised principle “To take personal responsibility for demonstrating, and leadership by adopting, the highest standards of professionalism, by complying with relevant laws and regulations and accepting the moral obligation to act in a professional manner in the public interest, avoiding any conduct that discredits the profession.” Current Principle To comply with relevant laws and regulations and avoid any action that discredits the profession.

13. © Copyright ICAS 2011 4.Questions ?