Professional Ethics Prescribed for the Members in Practice

This article throws light upon the six main professional ethics prescribed by the I.C.W.A.I for the members in practice (Cost Accountants). Some of the Professional Ethics are: 1. Independence, Integrity, Objectivity 2. Responsibility to Clients and Confidentiality 3. Responsibilities to Colleagues 4. Responsibilities to Practice and Profession including Firm Name, Service Holding, Designation etc and a few others.

Professional Ethic # 1. Independence, Integrity, Objectivity:

A member shall be straightforward, honest and sincere in his approach to professional work.

A member must be fair and must not allow prejudice or bias to over-ride objectivity and should maintain impartial attitude while reporting on cost and financial statements.

A member should be and should appear to be free of any interest which might be regarded as being incompatible with integrity and objectivity.

To ensure independence, a member shall not have substantial financial involvement in client’s affairs/business.

If a member has any family/personal relationship with the client, it should be disclosed.

Professional Ethic # 2. Responsibility to Clients and Confidentiality:

A member should respect confidentiality of information acquired in course of work and should not disclose any such information to a third party without specific authority/consent of client or unless there is a legal/professional right/duty to disclosure.

Confidential information not to be used for personal gain or gain of a third party. It is obligatory to ensure that employees/assistants of the member or individuals from whom the member obtains advice/assistance faithfully respect the principle of confidentiality.

Professional Ethic # 3. Responsibilities to Colleagues:

No practising member shall directly or indirectly solicit business.

If a practising member is approached by a client of another member to give services or advice of a special character, communication must be made to the other member of the circumstances.

A practising member receiving an engagement for services under referral from another member shall not go beyond the extent of that engagement without consulting the referring member.

If a member is approached to replace another member, that appointment must not be accepted without first communicating with the previous or existing holder of office and ascertaining existence of any professional reason necessitating such change; and

Communication in all cases must be made before acceptance of appointment.

Professional Ethic # 4. Responsibilities to Practice and Profession including Firm Name, Service Holding, Designation etc.:

In case a Practising Member/Firm maintains branch office in India, each shall be under separate charge of a member of ICWAI.

A Practising Member is guilty of professional misconduct if:

a. The Practising Member allows any person to practice in the former’s name or allows such person to sign any financial/cost statement or certificate on his behalf unless the latter is a member in practice and is in partnership with or employed by the former.

b. The Practising Member pays, allows or agrees to pay, directly or indirectly any share/commission/brokerage in the fees/profits of his professional business to any person other than a member or a partner/a retired partner/legal representative of a deceased partner.

c. The Practising Member engages in any other business and occupation excluding those allowed by a General or Specific Resolution of the Council of the Institute.

d. The Practising Member certifies or submits in his name or in a firm name a report of an examination of financial/cost statements unless examination of such state­ments and related records are done by him or by a partner or employee of his firm or by another practising member.

e. Members to restrict use of trade/firm name to proper names and not to adopt any other name.

The firm name shall not be fictitious, indicative of specialisation or misleading as to the type of organisation.

Professional Ethic # 5. Competence and Technical Standards:

Members are duty bound to carry out professional work with care and skill and in conformity with the technical and professional standards prescribed by the related professional body or legislation of the country. Members are to accept professional work only within their professional competence.

Professional Ethic # 6. Publicity, Fees and Allied Issues:

Soliciting of Clients and Professional Work:

Following are prohibited:

a. Soliciting of clients/professional work, personal communication/interview by any means.

b. Responding to tenders/advertisements/circulars inviting quotation for professional work (not applicable on enquiry by Government Company/Government Depts./Banks/Co-op. Societies, Institutions).

c. Soliciting of professional work by making roving enquiry and making offer for employment against advertisement.

d. Advertising for employment or for sub-contract/agency work.

e. Any advertisement or note to public/press that amounts to soliciting or canvassing.

Fees:

Following are prohibited:

a. To charge/offer to charge/accept/offer to accept any fee for professional work as a percentage of profit or which are contingent upon the findings and results of such work.

b. To obtain professional work-through having quoted for that purpose a fee lower than that charged by the cost accountant previously carrying out that work.

Publicity to Professional Attainment and Firm:

(a) Following are prohibited:

i. Advertisement of own professional attainment/services.

ii. Use of any designation/description other than degrees of universities established by law in India or accepted by Central Government or membership of ICWAI/ professional Institutes recognised by Central Government or other degrees/titles permitted by the Council.

iii. Press publicity to appointment as an auditor,

(b) Following are permitted:

i. Advertising changes in address/partnerships, dissolutions.

ii. Entry into Telephone Directory to classified list under group heading limited to Cost Accountants provided that all members of the area have access to such entry of own name whether with or without payment of additional charges, where Telephone Authorities include in the Directory a separate section with names of subscribers arranged according to group classification.

iii. Personal discussion/correspondence with prospective clients relating to achieve­ments and capabilities.

iv. Telephone Directory entry in block type permitted but entry in other directories or similar publications shall not be a leaded type.

v. Publicity to member’s appointment to positions of local/national importance is encouraged (but firm name shall be avoided).

vi. Notice to press—examination success of candidates belonging to a firm (without giving undue publicity to the firm).

Advertisement:

Following are allowed provided that prominence of display is not unusual:

a. Advertisement for staff/trainee in own office.

b. Advertisement on behalf of clients requiring staff or wishing to acquire/dispose of property business.

c. Advertisement for sale of business/property with the practising member acting as trustee/liquidator.

d. (In case of advertisement for staff, member’s name in the advertisement can be mentioned once only as a part of forwarding address).

e. Publication of any document certified by the practising member (provided that nature and extent of such publication justifies the purpose of publication).