Chartered Accountants now operate under a new Code of Ethics issued by the APESB. 
Story Paul Meredith CA 
 
On 1 July 2006, the joint Code of Professional Conduct, which has applied to members of the Institute and CPA Australia since September 1997, was replaced. The new code now in force is the Code of Ethics for Professional Accountants. This code has been issued by the Accounting Professional and Ethical Standards Board (APESB), which is itself a newly established board that came into existence in February 2006. 
 
Background to the Establishment of the APESB  
Prior to the establishment of the APESB, the development of the Code of Professional Conduct and other miscellaneous professional statements was administered by the professional standards team within the Institute, together with their counterparts at CPA Australia, and ultimately ratified by the boards of each organisation. The two professional bodies had determined that their obligations to act in the public interest, and to do so transparently, would be enhanced by the establishment of an independent board to set professional standards that would be binding on their members. Accordingly, the Accounting Professional and Ethical Standards Board Ltd was constituted on 7 February 2006. 
 
The Structure of the APESB 
The APESB currently has four directors, two appointed by the Institute, and two appointed by CPA Australia. 
To strengthen the independence of the board and to provide a focus for consideration of the public interest, the APESB intends to appoint two additional directors, who will not be members of either professional body. Details of current board members can be accessed at the APESB website, apesb.org.au 
 
The Development of a New Code of Ethics 
The two professional bodies are members of the International Federation of Accountants (IFAC). In July 2005, IFAC released a Code of Ethics for Professional Accountants. Under the terms of IFAC’s membership obligations, the Institute and CPA Australia were required to use their best endeavours to implement the IFAC Code locally. To achieve this, a joint taskforce was set up in September 2005.Following the establishment of the APESB, this task was transferred from the taskforce to the new board. 
 
The Code of Ethics for Professional Accountants issued by the APESB is therefore based on the IFAC Code of the same name. The APESB has sought to adapt the IFAC Code to Australian circumstances, both by changing the IFAC wording where appropriate, and by the insertion of additional Australian paragraphs, denoted by the letters AUST appearing before the paragraph number. In addition, the APESB sought to ensure that the obligations of members under the new APESB Code were consistent with their obligations under the former joint Code of Professional Conduct. Due to the need to have the new Code in force by 1 July 2006, in order to comply with IFAC’s membership obligations, the board was limited to offering an exposure period of one month for consideration of the exposure draft of the new Code. However, the constitution of the APESB requires it to review newly introduced standards after six months, and to review all its standards on an annual cycle. As such, members are encouraged to raise any concerns about the new Code with the professional standards team of the Institute, for feeding into the APESB review process. The team can be contacted by email at pro_standards@icaa.org.au 
 
Features Of The New Code  
The new APESB Code is in three parts. Part A establishes the fundamental principles of professional ethics for members and provides a conceptual framework for applying those principles. Parts B and C illustrate how the conceptual framework is to be applied in specific situations – Part B applies to members in public practice; Part C applies to members in business. The Code identifies five fundamental principles of professional ethics and provides a conceptual framework under which all professional accountants are required to identify threats to these fundamental principles and, if there are threats, apply safeguards to ensure that the principles are not compromised. The fundamental principles identified in the Code are:

• Integrity – being straightforward and honest in all professional and business relationships
• Objectivity – not allowing professional judgment to be compromised by bias, conflict of interest or the undue influence of others 
  
• Professional competence and due care – maintaining professional knowledge and skill at the level required to ensure competent professional service, and acting diligently in accordance with applicable standards when providing services 
  
• Confidentiality – respecting the confidentiality of information acquired as a result of business relationships and not disclosing any such information to third parties without proper authority 
  
• Professional behaviour – complying with relevant laws and regulations and avoiding any action that discredits the profession

• Self-interest threats, which may occur as a result of the financial or other interests of the individual or their family 
  
• Self-review threats, which may occur when a previous judgement needs to be re-evaluated by the accountant responsible for that judgement 
  
• Advocacy threats, which may occur when an accountant promotes a position or opinion to the point that subsequent objectivity may be compromised 
  
• Familiarity threats, which may occur when, because of a close relationship, an accountant becomes too sympathetic to the interests of others 
  
• Intimidation threats, which may occur when an accountant may be deterred from acting objectively by threats, actual or perceived.