CIMA 2

PART A—GENERAL APPLICATION OF THE CODE

SECTION 100
Introduction and Fundamental Principles
100.1 A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. Therefore, a professional accountant’s responsibility is not exclusively to satisfy the needs of an individual client or employer. In acting in the public interest, a professional accountant shall observe and comply with this Code. If a professional accountant is prohibited from complying with certain parts of this Code by law or regulation, the professional accountant shall comply with all other parts of this Code.

100.2 This Code contains three parts.

Part A establishes the fundamental principles of professional ethics for professional accountants and provides a conceptual framework that professional accountants shall
apply to:
a) Identify threats to compliance with the fundamental principles;
b) Evaluate the significance of the threats identified; and
c) Apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable level.

Safeguards are necessary when the professional accountant determines that the threats are not
at a level at which a reasonable and informed third party would be likely to conclude, weighing
all the specific facts and circumstances available to the professional accountant at that time, that
compliance with the fundamental principles is not compromised.
A professional accountant shall use professional judgment in applying this conceptual framework.

100.3 Parts B and C

describe how the conceptual framework applies in certain situations. They provide examples of safeguards that may be appropriate to address threats to compliance with the fundamental principles. They also describe situations where safeguards are not available to address the threats, and consequently, the circumstance or relationship creating the threats shall be avoided.

Part B applies
to professional accountants in public practice. Part C applies to professional accountants in business.
Professional accountants in public practice may also find Part C relevant to their particular circumstances.

100.4 The use of the word ‘shall’ in this Code imposes a requirement on the professional accountant or firm to comply with the specific provision in which ‘shall’ has been used. Compliance is required unless an exception is permitted by this Code.

Fundamental Principles
100.5 A professional accountant shall comply with the following fundamental principles:
a) Integrity – to be straightforward and honest in all professional and business relationships.
b) Objectivity – to not allow bias, conflict of interest or undue influence of others to override
professional or business judgments.
c) Professional Competence and Due Care – to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services based on current developments in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standards.
d) Confidentiality – 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 or professional right or duty to disclose, nor use the information for the personal advantage of the professional accountant or third parties.
e) Professional Behavior – to comply with relevant laws and regulations and avoid any action that discredits the profession. Each of these fundamental principles is discussed in more detail in Sections 110–150.

Conceptual Framework Approach
100.6 The circumstances in which professional accountants operate may create specific threats to compliance with the fundamental principles. It is impossible to define every situation that creates threats to compliance with the fundamental principles and specify the appropriate action. In addition, the nature of engagements and work assignments may differ and, consequently, different threats may be created, requiring the application of different safeguards. Therefore, this Code establishes a conceptual framework that requires a professional accountant to identify, evaluate, and address threats to compliance with the fundamental principles.

The conceptual framework approach assists professional accountants in complying with the ethical requirements of this Code and meeting their responsibility to act in the public interest. It accommodates many variations in circumstances that create threats to compliance with the fundamental principles and can deter a professional accountant from concluding that a situation is permitted if it is not specifically prohibited.

100.7 When a professional accountant identifies threats to compliance with the fundamental principles and, based on an evaluation of those threats, determines that they are not at an acceptable level, the professional accountant shall determine whether appropriate safeguards are available and can be applied to eliminate the threats or reduce them to an acceptable level.

In making that determination, the professional accountant shall exercise professional judgment and take into account whether a reasonable and informed third party, weighing all the specific facts and circumstances available to the professional accountant at the time, would be likely to conclude that the threats would be eliminated or reduced to an acceptable level by the application of the safeguards, such that compliance with the fundamental principles is not compromised.

100.8 A professional accountant shall evaluate any threats to compliance with the fundamental principles when the professional accountant knows, or could reasonably be expected to know, of circumstances or relationships that may compromise compliance with the fundamental principles.

100.9 A professional accountant shall take qualitative as well as quantitative factors into account when evaluating the significance of a threat. When applying the conceptual framework, a professional accountant may encounter situations in which threats cannot be eliminated or reduced to an acceptable level, either because the threat is too significant or because appropriate safeguards are not available or cannot be applied. In such situations, the professional accountant shall decline or discontinue the specific professional service involved or, when necessary, resign from the engagement (in the case of a professional accountant in public practice) or the employing organization (in the case of a professional accountant in business).

100.10 A professional accountant may inadvertently violate a provision of this Code. Depending on the nature and significance of the matter, such an inadvertent violation may be deemed not to compromise compliance with the fundamental principles provided, once the violation is discovered, the violation is corrected promptly and any necessary safeguards are applied.
100.11 When a professional accountant encounters unusual circumstances in which the application of a specific requirement of the Code would result in a disproportionate outcome or an outcome that may not be in the public interest, it is recommended that the professional accountant consult with a member body or the relevant regulator.

Threats and Safeguards
100.12 Threats may be created by a broad range of relationships and circumstances. When a relationship or circumstance creates a threat, such a threat could compromise, or could be perceived to compromise, a professional accountant’s compliance with the fundamental principles. A circumstance or relationship may create more than one threat, and a threat may affect compliance with more than one fundamental principle. Threats fall into one or more of the following categories:

a) Self-interest threat – the threat that a financial or other interest will inappropriately influence the professional accountant’s judgment or behavior;
b) Self-review threat – the threat that a professional accountant will not appropriately evaluate the results of a previous judgment made or service performed by the professional accountant, or by another individual within the professional accountant’s firm or employing organization, on which the accountant will rely when forming a judgment as part of providing a current service;
c) Advocacy threat – the threat that a professional accountant will promote a client’s or employer’s position to the point that the professional accountant’s objectivity is compromised;
d) Familiarity threat – the threat that due to a long or close relationship with a client or employer, a professional accountant will be too sympathetic to their interests or too accepting of their work; and
e) Intimidation threat – the threat that a professional accountant will be deterred from acting
objectively because of actual or perceived pressures, including attempts to exercise undue influence
over the professional accountant.

Parts B and C of this Code explain how these categories of threats may be created for professional accountants in public practice and professional accountants in business, respectively. Professional accountants in public practice may also find Part C relevant to their particular circumstances.

100.13 Safeguards are actions or other measures that may eliminate threats or reduce them to an acceptable level. They fall into two broad categories:
a) Safeguards created by the profession, legislation or regulation; and
b) Safeguards in the work environment.

100.14 Safeguards created by the profession, legislation or regulation include:
Educational, training and experience requirements for entry into the profession.
Continuing professional development requirements.
Corporate governance regulations.
Professional standards.
Professional or regulatory monitoring and disciplinary procedures. External review by a legally empowered third party of the reports, returns, communications or information produced by a professional accountant.

100.15 Parts B and C of this Code discuss safeguards in the work environment for professional
accountants in public practice and professional accountants in business, respectively.

100.16 Certain safeguards may increase the likelihood of identifying or deterring unethical behavior. Such safeguards, which may be created by the accounting profession, legislation, regulation, or an employing organization, include:

• Effective, well-publicized complaint systems operated by the employing organization, the profession or a regulator, which enable colleagues, employers and members of the public to draw attention to unprofessional or unethical behavior.
• An explicitly stated duty to report breaches of ethical requirements.

Ethical Conflict Resolution
100.17 A professional accountant may be required to resolve a conflict in complying with the
fundamental principles.
100.18 When initiating either a formal or informal conflict resolution process, the following factors, either individually or together with other factors, may be relevant to the resolution process:
a) Relevant facts;
b) Ethical issues involved;
c) Fundamental principles related to the matter in question;
d) Established internal procedures; and
e) Alternative courses of action.

Having considered the relevant factors, a professional accountant shall determine the appropriate course of action, weighing the consequences of each possible course of action. If the matter remains unresolved, the professional accountant may wish to consult with other appropriate persons within the firm or employing organization for help in obtaining resolution.

100.19 Where a matter involves a conflict with, or within, an organization, a professional accountant shall determine whether to consult with those charged with governance of the organization, such as the board of directors or the audit committee.

100.20 It may be in the best interests of the professional accountant to document the substance of the issue, the details of any discussions held, and the decisions made concerning that issue.

100.21 If a significant conflict cannot be resolved, a professional accountant may consider obtaining professional advice from the relevant professional body or from legal advisors. The professional accountant generally can obtain guidance on ethical issues without breaching the fundamental principle of confidentiality if the matter is discussed with the relevant professional body on an anonymous basis or with a legal advisory under the protection of legal privilege. Instances in which the professional accountant may consider obtaining legal advice vary. For example, a professional accountant may have encountered a fraud, the reporting of which could breach the professional accountant’s responsibility to respect confidentiality. The professional accountant may consider obtaining legal advice in that instance to determine whether there is a requirement to report.

100.22 If, after exhausting all relevant possibilities, the ethical conflict remains unresolved, a professional accountant shall, where possible, refuse to remain associated with the matter creating the conflict. The professional accountant shall determine whether, in the circumstances, it is appropriate to withdraw from the engagement team or specific assignment, or to resign altogether from the engagement, the firm or the employing organization.

SECTION 110
Integrity
110.1 The principle of integrity imposes an obligation on all professional accountants to be
straightforward and honest in all professional and business relationships. Integrity also implies fair dealing and truthfulness.
110.2 A professional accountant shall not knowingly be associated with reports, returns, communications or other information where the professional accountant believes that the information:
a) Contains a materially false or misleading statement;
b) Contains statements or information furnished recklessly; or
c) Omits or obscures information required to be included where such omission or obscurity would be misleading. When a professional accountant becomes aware that the accountant has been associated with such information, the accountant shall take steps to be disassociated from that information.
110.3 A professional accountant will be deemed not to be in breach of paragraph 110.2 if the professional accountant provides a modified report in respect of a matter contained in paragraph 110.2.

SECTION 120
Objectivity
120.1 The principle of objectivity imposes an obligation on all professional accountants not to
compromise their professional or business judgment because of bias, conflict of interest or the undue influence of others.
120.2 A professional accountant may be exposed to situations that may impair objectivity. It is
impracticable to define and prescribe all such situations. A professional accountant shall not perform a professional service if a circumstance or relationship biases or unduly influences the accountant’s professional judgment with respect to that service.

SECTION 130
Professional Competence and Due Care
130.1 The principle of professional competence and due care imposes the following obligations on all professional accountants:
a) To maintain professional knowledge and skill at the level required to ensure that clients or employers receive competent professional service; and
b) To act diligently in accordance with applicable technical and professional standards when providing professional services.
130.2 Competent professional service requires the exercise of sound judgment in applying professional knowledge and skill in the performance of such service. Professional competence may be divided into two separate phases:
a) Attainment of professional competence; and
b) Maintenance of professional competence.

130.3 The maintenance of professional competence requires a continuing awareness and an
understanding of relevant technical, professional and business developments. Continuing professional development enables a professional accountant to develop and maintain the capabilities to perform competently within the professional environment.
130.4 Diligence encompasses the responsibility to act in accordance with the requirements of an assignment, carefully, thoroughly and on a timely basis.
130.5 A professional accountant shall take reasonable steps to ensure that those working under the professional accountant’s authority in a professional capacity have appropriate training and supervision.
130.6 Where appropriate, a professional accountant shall make clients, employers or other users of the accountant’s professional services aware of the limitations inherent in the services.

SECTION 140
Confidentiality
140.1 The principle of confidentiality imposes an obligation on all professional accountants to refrain from:
a) Disclosing outside the firm or employing organization confidential information acquired as a result of professional and business relationships without proper and specific authority or unless there is a legal or professional right or duty to disclose; and
b) Using confidential information acquired as a result of professional and business relationships to their personal advantage or the advantage of third parties.
140.2 A professional accountant shall maintain confidentiality, including in a social environment, being alert to the possibility of inadvertent disclosure, particularly to a close business associate or a close or immediate family member.
140.3 A professional accountant shall maintain confidentiality of information disclosed by a prospective client or employer.
140.4 A professional accountant shall maintain confidentiality of information within the firm or
employing organization.
140.5 A professional accountant shall take reasonable steps to ensure that staff under the professional accountant’s control and persons from whom advice and assistance is obtained respect the professional accountant’s duty of confidentiality.
140.6 The need to comply with the principle of confidentiality continues even after the end of
relationships between a professional accountant and a client or employer. When a professional accountant changes employment or acquires a new client, the professional accountant is entitled to use prior experience.
The professional accountant shall not, however, use or disclose any confidential information either acquired or received as a result of a professional or business relationship.
140.7 The following are circumstances where professional accountants are or may be required to disclose confidential information or when such disclosure may be appropriate:

a) Disclosure is permitted by law and is authorized by the client or the employer;
b) Disclosure is required by law, for example:

i) Production of documents or other provision of evidence in the course of legal proceedings; or
ii) Disclosure to the appropriate public authorities of infringements of the law that come to light; and

c) There is a professional duty or right to disclose, when not prohibited by law:
i) To comply with the quality review of a member body or professional body;
ii) To respond to an inquiry or investigation by a member body or regulatory body;
iii) To protect the professional interests of a professional accountant in legal proceedings; or
iv) To comply with technical standards and ethics requirements.

140.8 In deciding whether to disclose confidential information, relevant factors to consider include:
a) Whether the interests of all parties, including third parties whose interests may be affected, could be harmed if the client or employer consents to the disclosure of information by the professional accountant;
b) Whether all the relevant information is known and substantiated, to the extent it is practicable; when the situation involves unsubstantiated facts, incomplete information or unsubstantiated conclusions, professional judgment shall be used in determining the type of disclosure to be made, if any;

c) The type of communication that is expected and to whom it is addressed; and
d) Whether the parties to whom the communication is addressed are appropriate recipients.

SECTION 150
Professional Behavior
150.1 The principle of professional behavior imposes an obligation on all professional accountants to comply with relevant laws and regulations and avoid any action that the professional accountant knows or should know may discredit the profession. This includes actions that a reasonable and informed third party, weighing all the specific facts and circumstances available to the professional accountant at that time, would be likely to conclude adversely affects the good reputation of the profession.

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

PART B—PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE Page
Section 200 Introduction 12
Section 210 Professional Appointment 15
Section 220 Conflicts of Interest 17
Section 230 Second Opinions 18
Section 240 Fees and Other Types of Remuneration 18
Section 250 Marketing Professional Services 20
Section 260 Gifts and Hospitality 20
Section 270 Custody of Client Assets 20
Section 280 Objectivity – All Services 21
Section 290 Independence – Audit and Review Engagements: see Annex 1 separate document
Section 291 Independence – Other Assurance Engagements: see Annex 1 separate document
NOTE: CIMA Code of Ethics:Annex 1 – Separate document
Sections 290 and 291 address the independence requirements for audit, review and other assurance
engagements and apply a conceptual framework approach. They also include commentary on the
independence requirements and the effective date and transitional provisions for public interest entities,
partner rotation, non-assurance services, fees and compensation and evaluation policies.

SECTION 200
Introduction
200.1 This Part of the Code describes how the conceptual framework contained in Part A applies in
certain situations to professional accountants in public practice. This Part does not describe all of the
circumstances and relationships that could be encountered by a professional accountant in public
practice that create or may create threats to compliance with the fundamental principles. Therefore,
the professional accountant in public practice is encouraged to be alert for such circumstances and
relationships.
200.2 A professional accountant in public practice shall not knowingly engage in any business, occupation,
or activity that impairs or might impair integrity, objectivity or the good reputation of the profession and
as a result would be incompatible with the fundamental principles.
Threats and Safeguards
200.3 Compliance with the fundamental principles may potentially be threatened by a broad range
of circumstances and relationships. The nature and significance of the threats may differ depending on
whether they arise in relation to the provision of services to an audit client and whether the audit client is
a public interest entity, to an assurance client that is not an audit client, or to a non-assurance client.
Threats fall into one or more of the following categories:
a) Self-interest;
b) Self-review;
c) Advocacy;
d) Familiarity; and
e) Intimidation.
These threats are discussed further in Part A of this Code.
200.4 Examples of circumstances that create self-interest threats for a professional accountant in public
practice include:
• A member of the assurance team having a direct financial interest in the assurance client.
• A firm having undue dependence on total fees from a client.
• A member of the assurance team having a significant close business relationship with an assurance
client.
• A firm being concerned about the possibility of losing a significant client.
• A member of the audit team entering into employment negotiations with the audit client.
• A firm entering into a contingent fee arrangement relating to an assurance engagement.
• A professional accountant discovering a significant error when evaluating the results of a previous
professional service performed by a member of the professional accountant’s firm.
200.5 Examples of circumstances that create self-review threats for a professional accountant in public
practice include:
• A firm issuing an assurance report on the effectiveness of the operation of financial systems after
designing or implementing the systems.
• A firm having prepared the original data used to generate records that are the subject matter of the
assurance engagement.
• A member of the assurance team being, or having recently been, a director or officer of the client.
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• A member of the assurance team being, or having recently been, employed by the client in a position
to exert significant influence over the subject matter of the engagement.
• The firm performing a service for an assurance client that directly affects the subject matter
information of the assurance engagement.
200.6 Examples of circumstances that create advocacy threats for a professional accountant in public
practice include:
• The firm promoting shares in an audit client.
• A professional accountant acting as an advocate on behalf of an audit client in litigation or disputes
with third parties.
200.7 Examples of circumstances that create familiarity threats for a professional accountant in public
practice include:
• A member of the engagement team having a close or immediate family member who is a director or
officer of the client.
• A member of the engagement team having a close or immediate family member who is an employee of
the client who is in a position to exert significant influence over the subject matter of the engagement.
• A director or officer of the client or an employee in a position to exert significant influence over the
subject matter of the engagement having recently served as the engagement partner.
• A professional accountant accepting gifts or preferential treatment from a client, unless the value is
trivial or inconsequential.
• Senior personnel having a long association with the assurance client.
200.8 Examples of circumstances that create intimidation threats for a professional accountant in public
practice include:
• A firm being threatened with dismissal from a client engagement.
• An audit client indicating that it will not award a planned non-assurance contract to the firm if the
firm continues to disagree with the client’s accounting treatment for a particular transaction.
• A firm being threatened with litigation by the client.
• A firm being pressured to reduce inappropriately the extent of work performed in order to reduce fees.
• A professional accountant feeling pressured to agree with the judgment of a client employee because
the employee has more expertise on the matter in question.
• A professional accountant being informed by a partner of the firm that a planned promotion will not
occur unless the accountant agrees with an audit client’s inappropriate accounting treatment.
200.9 Safeguards that may eliminate or reduce threats to an acceptable level fall into two broad
categories:
a) Safeguards created by the profession, legislation or regulation; and
b) Safeguards in the work environment.
Examples of safeguards created by the profession, legislation or regulation are described in paragraph
100.14 of Part A of this Code.
200.10 A professional accountant in public practice shall exercise judgment to determine how best to
deal with threats that are not at an acceptable level, whether by applying safeguards to eliminate the
threat or reduce it to an acceptable level or by terminating or declining the relevant engagement. In
exercising this judgment, a professional accountant in public practice shall consider whether a reasonable
and informed third party, weighing all the specific facts and circumstances available to the professional
accountant at that time, would be likely to conclude that the threats would be eliminated or reduced to an

acceptable level by the application of safeguards, such that compliance with the fundamental principles is
not compromised. This consideration will be affected by matters such as the significance of the threat, the
nature of the engagement and the structure of the firm.
200.11 In the work environment, the relevant safeguards will vary depending on the circumstances. Work
environment safeguards comprise firm-wide safeguards and engagement-specific safeguards.
200.12 Examples of firm-wide safeguards in the work environment include:
• Leadership of the firm that stresses the importance of compliance with the fundamental principles.
• Leadership of the firm that establishes the expectation that members of an assurance team will act in
the public interest.
• Policies and procedures to implement and monitor quality control of engagements.
• Documented policies regarding the need to identify threats to compliance with the fundamental
principles, evaluate the significance of those threats, and apply safeguards to eliminate or reduce the
threats to an acceptable level or, when appropriate safeguards are not available or cannot be applied,
terminate or decline the relevant engagement.
• Documented internal policies and procedures requiring compliance with the fundamental principles.
• Policies and procedures that will enable the identification of interests or relationships between the
firm or members of engagement teams and clients.
• Policies and procedures to monitor and, if necessary, manage the reliance on revenue received from a
single client.
• Using different partners and engagement teams with separate reporting lines for the provision of nonassurance
services to an assurance client.
• Policies and procedures to prohibit individuals who are not members of an engagement team from
inappropriately influencing the outcome of the engagement.
• Timely communication of a firm’s policies and procedures, including any changes to them, to
all partners and professional staff, and appropriate training and education on such policies and
procedures.
• Designating a member of senior management to be responsible for overseeing the adequate functioning of
the firm’s quality control system.
• Advising partners and professional staff of assurance clients and related entities from which
independence is required.
• A disciplinary mechanism to promote compliance with policies and procedures.
• Published policies and procedures to encourage and empower staff to communicate to senior levels
within the firm any issue relating to compliance with the fundamental principles that concerns them.
200.13 Examples of engagement-specific safeguards in the work environment include:
• Having a professional accountant who was not involved with the non-assurance service review the
non-assurance work performed or otherwise advise as necessary.
• Having a professional accountant who was not a member of the assurance team review the assurance
work performed or otherwise advise as necessary.
• Consulting an independent third party, such as a committee of independent directors, a professional
regulatory body or another professional accountant.
• Discussing ethical issues with those charged with governance of the client.
• Disclosing to those charged with governance of the client the nature of services provided and extent
of fees charged.
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• Involving another firm to perform or re-perform part of the engagement.
• Rotating senior assurance team personnel.
200.14 Depending on the nature of the engagement, a professional accountant in public practice may
also be able to rely on safeguards that the client has implemented. However it is not possible to rely solely
on such safeguards to reduce threats to an acceptable level.
200.15 Examples of safeguards within the client’s systems and procedures include:
• The client requires persons other than management to ratify or approve the appointment of a firm to
perform an engagement.
• The client has competent employees with experience and seniority to make managerial decisions.
• The client has implemented internal procedures that ensure objective choices in commissioning nonassurance
engagements.
• The client has a corporate governance structure that provides appropriate oversight and communications
regarding the firm’s services.
SECTION 210
Professional Appointment
Client Acceptance
210.1 Before accepting a new client relationship, a professional accountant in public practice shall
determine whether acceptance would create any threats to compliance with the fundamental principles.
Potential threats to integrity or professional behavior may be created from, for example, questionable
issues associated with the client (its owners, management or activities).
210.2 Client issues that, if known, could threaten compliance with the fundamental principles include, for
example, client involvement in illegal activities (such as money laundering), dishonesty or questionable financial
reporting practices.
210.3 A professional accountant in public practice shall evaluate the significance of any threats and apply
safeguards when necessary to eliminate them or reduce them to an acceptable level.
Examples of such safeguards include:
• Obtaining knowledge and understanding of the client, its owners, managers and those responsible for
its governance and business activities; or
• Securing the client’s commitment to improve corporate governance practices or internal controls.
210.4 Where it is not possible to reduce the threats to an acceptable level, the professional accountant in
public practice shall decline to enter into the client relationship.
210.5 It is recommended that a professional accountant in public practice periodically review acceptance
decisions for recurring client engagements.
Engagement Acceptance
210.6 The fundamental principle of professional competence and due care imposes an obligation on a
professional accountant in public practice to provide only those services that the professional accountant
in public practice is competent to perform. Before accepting a specific client engagement, a professional
accountant in public practice shall determine whether acceptance would create any threats to compliance
with the fundamental principles. For example, a self-interest threat to professional competence and due care is
created if the engagement team does not possess, or cannot acquire, the competencies necessary to properly
carry out the engagement.
210.7 A professional accountant in public practice shall evaluate the significance of threats and apply
safeguards, when necessary, to eliminate them or reduce them to an acceptable level.
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Examples of such safeguards include:
• Acquiring an appropriate understanding of the nature of the client’s business, the complexity of its
operations, the specific requirements of the engagement and the purpose, nature and scope of the
work to be performed.
• Acquiring knowledge of relevant industries or subject matters.
• Possessing or obtaining experience with relevant regulatory or reporting requirements.
• Assigning sufficient staff with the necessary competencies.
• Using experts where necessary.
• Agreeing on a realistic time frame for the performance of the engagement.
• Complying with quality control policies and procedures designed to provide reasonable assurance that
specific engagements are accepted only when they can be performed competently.
210.8 When a professional accountant in public practice intends to rely on the advice or work of an
expert, the professional accountant in public practice shall determine whether such reliance is warranted.
Factors to consider include: reputation, expertise, resources available and applicable professional and
ethical standards. Such information may be gained from prior association with the expert or from
consulting others.
Changes in a Professional Appointment
210.9 A professional accountant in public practice who is asked to replace another professional
accountant in public practice, or who is considering tendering for an engagement currently held by another
professional accountant in public practice, shall determine whether there are any reasons, professional or
otherwise, for not accepting the engagement, such as circumstances that create threats to compliance
with the fundamental principles that cannot be eliminated or reduced to an acceptable level by the
application of safeguards. For example, there may be a threat to professional competence and due care if a
professional accountant in public practice accepts the engagement before knowing all the pertinent facts.
210.10 A professional accountant in public practice shall evaluate the significance of any threats.
Depending on the nature of the engagement, this may require direct communication with the existing
accountant to establish the facts and circumstances regarding the proposed change so that the
professional accountant in public practice can decide whether it would be appropriate to accept the
engagement. For example, the apparent reasons for the change in appointment may not fully reflect the
facts and may indicate disagreements with the existing accountant that may influence the decision to
accept the appointment.
210.11 Safeguards shall be applied when necessary to eliminate any threats or reduce them to an
acceptable level. Examples of such safeguards include:
• When replying to requests to submit tenders, stating in the tender that, before accepting the
engagement, contact with the existing accountant will be requested so that inquiries may be made as
to whether there are any professional or other reasons why the appointment should not be accepted;
• Asking the existing accountant to provide known information on any facts or circumstances that,
in the existing accountant’s opinion, the proposed accountant needs to be aware of before deciding
whether to accept the engagement; or
• Obtaining necessary information from other sources.
When the threats cannot be eliminated or reduced to an acceptable level through the application of
safeguards, a professional accountant in public practice shall, unless there is satisfaction as to necessary
facts by other means, decline the engagement.
210.12 A professional accountant in public practice may be asked to undertake work that is complementary
or additional to the work of the existing accountant. Such circumstances may create threats to professional
competence and due care resulting from, for example, a lack of or incomplete information. The significance of
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CIMA CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS
any threats shall be evaluated and safeguards applied when necessary to eliminate the threat or reduce it to
an acceptable level. An example of such a safeguard is notifying the existing accountant of the proposed work,
which would give the existing accountant the opportunity to provide any relevant information needed for the
proper conduct of the work.
210.13 An existing accountant is bound by confidentiality. Whether that professional accountant is
permitted or required to discuss the affairs of a client with a proposed accountant will depend on the
nature of the engagement and on:
a) Whether the client’s permission to do so has been obtained; or
b) The legal or ethical requirements relating to such communications and disclosure, which may vary by
jurisdiction.
Circumstances where the professional accountant is or may be required to disclose confidential
information or where such disclosure may otherwise be appropriate are set out in Section 140 of Part A of
this Code.
210.14 A professional accountant in public practice will generally need to obtain the client’s permission,
preferably in writing, to initiate discussion with an existing accountant. Once that permission is obtained,
the existing accountant shall comply with relevant legal and other regulations governing such requests.
Where the existing accountant provides information, it shall be provided honestly and unambiguously.
If the proposed accountant is unable to communicate with the existing accountant, the proposed
accountant shall take reasonable steps to obtain information about any possible threats by other means,
such as through inquiries of third parties or background investigations of senior management or those
charged with governance of the client.
SECTION 220
Conflicts of Interest
220.1 A professional accountant in public practice shall take reasonable steps to identify circumstances
that could pose a conflict of interest. Such circumstances may create threats to compliance with
the fundamental principles. For example, a threat to objectivity may be created when a professional
accountant in public practice competes directly with a client or has a joint venture or similar arrangement
with a major competitor of a client. A threat to objectivity or confidentiality may also be created when a
professional accountant in public practice performs services for clients whose interests are in conflict or
the clients are in dispute with each other in relation to the matter or transaction in question.
220.2 A professional accountant in public practice shall evaluate the significance of any threats and
apply safeguards when necessary to eliminate the threats or reduce them to an acceptable level. Before
accepting or continuing a client relationship or specific engagement, the professional accountant in public
practice shall evaluate the significance of any threats created by business interests or relationships with
the client or a third party.
220.3 Depending upon the circumstances giving rise to the conflict, application of one of the following
safeguards is generally necessary:
a) Notifying the client of the firm’s business interest or activities that may represent a conflict of
interest and obtaining their consent to act in such circumstances; or
b) Notifying all known relevant parties that the professional accountant in public practice is acting
for two or more parties in respect of a matter where their respective interests are in conflict and
obtaining their consent to so act; or
c) Notifying the client that the professional accountant in public practice does not act exclusively for any one
client in the provision of proposed services (for example, in a particular market sector or with respect to a
specific service) and obtaining their consent to so act.
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CIMA CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS
220.4 The professional accountant shall also determine whether to apply one or more of the following
additional safeguards:
a) The use of separate engagement teams;
b) Procedures to prevent access to information (for example, strict physical separation of such teams,
confidential and secure data filing);
c) Clear guidelines for members of the engagement team on issues of security and confidentiality;
d) The use of confidentiality agreements signed by employees and partners of the firm; and
e) Regular review of the application of safeguards by a senior individual not involved with relevant client
engagements.
220.5 Where a conflict of interest creates a threat to one or more of the fundamental principles, including
objectivity, confidentiality, or professional behavior, that cannot be eliminated or reduced to an acceptable
level through the application of safeguards, the professional accountant in public practice shall not accept
a specific engagement or shall resign from one or more conflicting engagements.
220.6 Where a professional accountant in public practice has requested consent from a client to act for
another party (which may or may not be an existing client) in respect of a matter where the respective
interests are in conflict and that consent has been refused by the client, the professional accountant in
public practice shall not continue to act for one of the parties in the matter giving rise to the conflict of
interest.
SECTION 230
Second Opinions
230.1 Situations where a professional accountant in public practice is asked to provide a second
opinion on the application of accounting, auditing, reporting or other standards or principles to specific
circumstances or transactions by or on behalf of a company or an entity that is not an existing client
may create threats to compliance with the fundamental principles. For example, there may be a threat
to professional competence and due care in circumstances where the second opinion is not based on the
same set of facts that were made available to the existing accountant or is based on inadequate evidence.
The existence and significance of any threat will depend on the circumstances of the request and all the
other available facts and assumptions relevant to the expression of a professional judgment.
230.2 When asked to provide such an opinion, a professional accountant in public practice shall evaluate
the significance of any threats and apply safeguards when necessary to eliminate them or reduce them to
an acceptable level. Examples of such safeguards include seeking client permission to contact the existing
accountant, describing the limitations surrounding any opinion in communications with the client and
providing the existing accountant with a copy of the opinion.
230.3 If the company or entity seeking the opinion will not permit communication with the existing
accountant, a professional accountant in public practice shall determine whether, taking all the
circumstances into account, it is appropriate to provide the opinion sought.
SECTION 240
Fees and Other Types of Remuneration
240.1 When entering into negotiations regarding professional services, a professional accountant in public
practice may quote whatever fee is deemed appropriate. The fact that one professional accountant in
public practice may quote a fee lower than another is not in itself unethical. Nevertheless, there may be
threats to compliance with the fundamental principles arising from the level of fees quoted. For example,
a self-interest threat to professional competence and due care is created if the fee quoted is so low that
it may be difficult to perform the engagement in accordance with applicable technical and professional
standards for that price.
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