Ethical threats and safeguards
There are a number of ethical threats that accountants could face. These include:
Self-interest threat: This threat occurs when an accountant’s personal interests conflict with their professional duties and responsibilities. For example, an accountant might be tempted to manipulate financial statements in order to benefit themselves or a personal acquaintance.
Self-review threat: This threat occurs when an accountant reviews their own work, potentially leading to biased judgment. For example, an accountant might be reluctant to identify errors or weaknesses in their own work due to a desire to avoid criticism or maintain their reputation.
Advocacy threat: This threat occurs when an accountant promotes a particular point of view or position, potentially compromising their objectivity. For example, an accountant might be biased in favour of a client or employer and present financial information in a way that is favourable to them, rather than presenting an objective and unbiased assessment.
Familiarity threat: This threat occurs when an accountant has a close personal relationship with a client or employer, potentially leading to biased judgment. For example, an accountant might be more lenient in their assessment of a client’s financial statements if they have a personal friendship with the client.
Intimidation threat: This threat occurs when an accountant is subjected to pressure or coercion that may compromise their professional judgment. For example, an accountant might be pressured by a client or employer to present financial information in a certain way, even if it is not accurate or appropriate.
Safeguards against these ethical threats include:
Self-interest threat: Accountants can implement safeguards against this threat by avoiding conflicts of interest and disclosing any potential conflicts to their clients or employers. They can also seek independent review of their work to ensure that their personal interests do not influence their professional judgment.
Self-review threat: To avoid the self-review threat, accountants can seek independent review and oversight of their work, such as having another accountant or team review their work before it is finalized. They can also seek guidance from professional standards and codes of conduct to ensure that they are adhering to appropriate ethical standards.
Advocacy threat: To avoid the advocacy threat, accountants can ensure that they maintain objectivity in their work by avoiding any potential conflicts of interest and seeking independent review and oversight of their work. They can also seek guidance from professional standards and codes of conduct to ensure that they are presenting information in an unbiased manner.
Familiarity threat: To avoid the familiarity threat, accountants can ensure that they disclose any close personal relationships to their clients or employers and seek independent review and oversight of their work. They can also seek guidance from professional standards and codes of conduct to ensure that they are maintaining objectivity in their work.
Intimidation threat: To avoid the intimidation threat, accountants can seek guidance from professional standards and codes of conduct to ensure that they are upholding their ethical responsibilities and are not subjected to inappropriate pressure or coercion. They can also seek support from colleagues or professional organizations if they feel that they are being subjected to intimidation.
Overall, it is important for accountants to be aware of these threats and to take steps to avoid them in order to maintain the integrity and credibility of their profession. This may include implementing policies and procedures to ensure that conflicts of interest are identified and managed, and seeking independent review and oversight of their work.