Which two of the following are among of the stated fundamental principles of the IFAC Code

CIMA's Code of Ethics changed on 1 January 2020

In order to ensure that it remains relevant and reflects the changing dynamics and pressures of the profession, the Code of Ethics was reviewed and updated for 2020. 

View the Code of Ethics

Read an article summarising the changes to the 2020 Code of Ethics

Introduction to the Code of Ethics

View a transcript of the animation 

How the Code is structured

Part 1: Complying with the Code, fundamental principles, and conceptual framework

Part 1 is applicable to all professional accountants and establishes the fundamental principles of professional ethics for professional accountants. It also provides a conceptual framework that they shall use to identify, evaluate and apply safeguards to eliminate threats to compliance with the fundamental principles.

View Part 1: Complying with the Code, fundamental principles, and conceptual framework

Part 2: Professional accountants in business (including CGMA designation holders)

Part 2 sets out additional material that applies to professional accountants in business when performing professional activities. Part 2 of the Code was developed in cooperation with the American Institute of CPAs (AICPA); and, like parts 1 and 3, the elements of the updated part 2 which apply to CIMA members and students continue to reflect IFAC’s fundamental principles and conceptual framework approach.

Professional accountants in business include professional accountants employed, engaged or contracted in an executive or non-executive capacity in, for example:

• Commerce, industry or service
• The public sector
• Education
• The not-for-profit sector
• Regulatory or professional bodies.

Part 2 is also applicable to individuals who are professional accountants in public practice when performing professional activities pursuant to their relationship with the firm, whether as a contractor, employee, or owner.

View Part 2: Professional accountants in business 

Part 3: Professional accountants in public practice

Part 3 sets out additional material that applies to professional accountants in public practice when providing professional services.
It provides examples of threats that could be encountered and how such threats might be evaluated and addressed. Requirements relating to communicating with those charged with governance is also covered (section 300.9).

View Part 3: Professional accountants in public practice

Annex 1

Part 4a - Independence for audit and review engagements

Part 4b - Independence for assurance engagements other than audit and review engagements

These Parts collectively form the International Independence Standards, and set out additional material that applies to professional accountants in public practice when providing assurance services.

For Annex 1 of the Code please refer directly to the full IFAC International Code of Ethics for Professional Accountants

Glossary

The glossary contains defined terms (together with additional explanations where appropriate) and described terms which have a specific meaning in certain parts of the Code. The glossary also includes lists of abbreviations that are used in the Code and other standards to which the Code refers.

View the glossary

How to use the Code

The Fundamental Principles, Independence and Conceptual Framework 

CIMA's Code of Ethics is made up of five fundamental principles:

Being straightforward, honest and truthful in all professional and business relationships. You should not be associated with any information that you believe contains a materially false or misleading statement, or which is misleading by omission.

View sub-section 111 on integrity

An ongoing commitment to your level of professional knowledge and skill. Base this on current developments in practice, legislation and techniques. Those working under your authority must also have the appropriate training and supervision.

View sub-section 113 on professional competence and due care

The Code requires you to comply with these fundamental principles of ethics. The Code also requires you to apply the conceptual framework to identify, evaluate and address threats to compliance with the fundamental principles. Applying the conceptual framework requires exercising professional judgment, remaining alert for new information and to changes in facts and circumstances, and using the reasonable and informed third party test.

Threats to compliance with the fundamental principles fall into one or more of the following categories:

• Self-interest threat: Commonly called a “conflict of interest” which may inappropriately influence judgment or behaviour.

• Self-review threat: When you are required to evaluate the results of a previous judgment or service.

• Advocacy threat: Arising if promoting a position or opinion to the point that your subsequent objectivity is compromised.

• Familiarity threat: When you become so sympathetic to the interests of others as a result of a close relationship that your professional judgment becomes compromised.

• Intimidation threat: When you are deterred from acting objectively by actual or perceived pressure or influence.

The conceptual framework recognises that the existence of conditions, policies and procedures established by the profession, legislation, regulation, the firm, or the employing organisation might affect the identification of threats. Those conditions, policies and procedures might also be a relevant factor in your evaluation of whether a threat is at an acceptable level. When threats are not at an acceptable level, the conceptual framework requires you to address those threats. Applying safeguards is one way that threats might be reduced. Safeguards are actions you take individually or in combination that effectively reduce threats to an acceptable level.

Complying with the Code requires knowing, understanding and applying:

• All of the relevant provisions of a particular section in the context of Part 1, together with the additional material set out in Sections 200, 300, 400 and 900 as applicable.

• All of the relevant provisions of a particular section, for example, applying the provisions that are set out under the subheadings titled “General” and “All Audit Clients” together with additional specific provisions, including those set out under the subheadings titled “Audit Clients that are not Public Interest Entities” or “Audit Clients that are Public Interest Entities”.

• All of the relevant provisions set out in a particular section together with any additional provisions set out in any relevant subsection.

Requirements and application material

Requirements and application material are to be read and applied with the objective of complying with the fundamental principles, applying the conceptual framework and, when performing audit, review and other assurance engagements, being independent.

Requirements are designated with the letter “R” and, in most cases, include the word “shall”. The word “shall” in the Code imposes an obligation on you or your firm to comply with the specific provision in which “shall” has been used. In some situations, the Code provides a specific exception to a requirement. In such a situation, the provision is designated with the letter “R” but uses “may” or conditional wording. When the word “may” is used in the Code, it denotes permission to take a particular action in certain circumstances, including as an exception to a requirement. It is not used to denote possibility. When the word “might” is used in the Code, it denotes the possibility of a matter arising, an event occurring or a course of action being taken. The term does not ascribe any particular level of possibility or likelihood when used in conjunction with a threat, as the evaluation of the level of a threat depends on the facts and circumstances of any particular matter, event or course of action.

In addition to requirements, the Code contains application material that provides context relevant to a proper understanding of the Code. In particular, the application material is intended to help you to understand how to apply the conceptual framework to a particular set of circumstances and to understand and comply with a specific requirement. While such application material does not of itself impose a requirement, consideration of the material is necessary to the proper application of the requirements of the Code, including application of the conceptual framework. Application material is designated with the letter “A”. Where application material includes lists of examples, these lists are not intended to be exhaustive. 

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