Question

The Berowra Accountants, have taken advertisements in the local newspaper with a bright colourful full page pictures of the staff and giving details of their being the top Accountants in the district and how they always get the highest tax deductions of all Accounting firms in the region.You are asked to state whether there has been a violation of the Accountants Code of Ethics and state which ethical principle has been violated and briefly providing a reason(s) for your opinion:

Answer 1

Section 100 of Code of ethics for professional Accountants provides some fundamental principles as follows-

(a) Integrity

(b) Objectivity

(c) Professional Competence and Due Care

(d) Confidentiality

(e) Professional Behavior

Section 150 stipulates Professional Behavior

150.1 The principle of professional behavior imposes an obligation on professional accountants to comply with relevant laws and regulations and avoid any action that may bring discredit to the profession. This includes actions which a reasonable and informed third party, having knowledge of all relevant information, would conclude negatively affects the good reputation of the profession.

150.2 In marketing and promoting themselves and their work, professional accountants should not bring the profession into disrepute. Professional accountants should be honest and truthful and should not:

(a) Make exaggerated claims for the services they are able to offer, the qualifications they possess, or experience they have gained; or

(b) Make disparaging references or unsubstantiated comparisons to the work of others.

Section 250 discusses about marketing Professional Services.

SECTION 250

250.1 When a professional accountant in public practice solicits new work through advertising or other forms of marketing, there may be potential threats to compliance with the fundamental principles.

For example, a self-interest threat to compliance with the principle of professional behavior is created if services, achievements or products are marketed in a way that is inconsistent with that principle.

250.2 A professional accountant in public practice should not bring the profession into disrepute when marketing professional services. He should be honest and truthful and should not:

• Make exaggerated claims for services offered, qualifications possessed or experience gained; or

• Make disparaging references to unsubstantiated comparisons to the work of another.

In case of doubt whether a proposed form of advertising or marketing is appropriate, the professional accountant in public practice should consult with the relevant professional body.

In the present case "The Berowra Accountants", have taken advertisements in the local newspaper with a bright colorful full page pictures of the staff and giving details of their being the top Accountants in the district and how they always get the highest tax deductions of all Accounting firms in the region. There has been a violation of fundamental principle of Professional Behavior as they have

(a) Made exaggerated claims for the services they are able to offer, or the qualifications they possess; and

(b) Made disparaging references or unsubstantiated comparisons to the work of others.

So as per Code of ethics for professional Accountants "The Berowra Accountants" are guilty of professional misconduct.