An accountant’s work depends on trust. Investors rely on the accounts, lenders rely on the figures and the public relies on auditors to tell the truth.
That trust exists only if accountants behave ethically, which is why professional ethics sits at the centre of the Institute of Chartered Accountants of Nigeria (ICAN) qualification and why a firm’s wider duty to society, its corporate social responsibility, matters to the business as well as the community.
This topic covers ethical thinking, the fundamental principles of professional ethics, the threats to them and the safeguards against those threats, confidentiality and whistleblowing, and corporate social responsibility. Ethics questions are usually scenarios, so the skill is to spot the principle at risk, name the threat and recommend what to do.
In 30 seconds
Ethics is the set of moral principles that guide behaviour. Accountants follow five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. Five kinds of threat can weaken them: self-interest, self-review, advocacy, familiarity and intimidation. Safeguards reduce the threats to an acceptable level, and if they cannot, the accountant must decline or withdraw.
Corporate social responsibility is a firm’s duty to act responsibly towards society and the environment, beyond what the law requires.
What is ethics?
Ethics is the study of right and wrong and the moral principles that guide conduct. Business ethics applies those principles to how organisations and their people behave. An ethical dilemma arises when a person must choose between options and each conflicts with some ethical principle or interest.
Three ways of reasoning about ethics
| Approach | Idea | Weakness |
|---|---|---|
| Utilitarian | The right action is the one that does the greatest good for the greatest number | It can justify harming a minority, and the good is hard to measure |
| Duty-based (deontological) | Some actions are right or wrong in themselves, whatever the result. People must follow rules and duties such as honesty | Rules can conflict, and rigid rules can give poor results |
| Virtue-based | The right action is the one a person of good character would take | It gives little guidance on what to do in a specific case |
Ethics in the syllabus
In the syllabus, ethics is the set of moral standards a society accepts, which tells people which conduct is right and which is wrong. Its main characteristics are that ethics:
- is a set of moral standards that a society accepts, and guides personal and professional conduct;
- is universal in its obligations but differs between societies, places and times;
- is normative: it deals with what ought to be, not what is;
- may not be legally binding, yet can be more powerful than law, and it shows up the shortcomings of law;
- applies to the behaviour of individuals and groups, and is not a set of hard and fast rules, so there is room for discretion;
- has no sharp boundary between ethical and unethical, which is why dilemmas arise; and
- has fairness and justice at its heart, and is related to, but not the same as, morality.
The core values for accountants are integrity, objectivity, professional competence and due care, confidentiality, professional behaviour and respect for the law.
Why ethics matters to the professional accountant
- Accurate financial reports. Ethical accountants do not manipulate data to make the position look better than it is.
- Accountability and trust. Investors and the public can rely on transparent, accurate reports. A company known to manipulate its data loses trust and may face legal penalties.
- Prevention of fraud and financial crime. Trained accountants spot and report suspicious activity.
- Integrity and professionalism. Ethical firms attract and keep skilled, honest staff, which brings stability and better financial performance.
The four general ethical principles
| Principle | Meaning |
|---|---|
| Beneficence | The duty to act in ways that benefit others and promote well-being |
| Non-maleficence | Do no harm. Avoid actions that could injure others |
| Autonomy | Respect each person’s right to make their own decisions |
| Justice | Fair sharing of benefits and burdens, with equal access to resources and opportunities |
Roles of professional bodies and regulators
| Role | What the body does |
|---|---|
| Code of ethics | Publishes the behaviour and moral principles expected of members |
| Training and resources | Runs programmes that teach members to handle ethical issues |
| Setting standards | Defines acceptable practice |
| Certification and accreditation | Signals adherence to ethical practice to clients and the public |
| Monitoring and enforcement | Investigates complaints, holds disciplinary hearings and imposes sanctions |
| Promoting accountability | Requires transparency and the reporting of unethical practice |
| Advocating for the public interest | Makes sure members put clients and society first |
| Continuing professional development | Keeps members current on ethical issues |
| Facilitating dialogue | Provides platforms to discuss ethical challenges |
The fundamental principles of professional ethics
ICAN members are bound by a code of ethics that follows the International Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA). It sets five fundamental principles.
| Principle | What it requires | Example |
|---|---|---|
| Integrity | Be straightforward and honest in all professional and business relationships | Refusing to be linked with a report that is false or misleading |
| Objectivity | Do not let bias, conflict of interest or the influence of others override professional judgement | Declining to audit a company in which you hold shares |
| Professional competence and due care | Keep professional knowledge and skill up to date, and act diligently in line with technical and professional standards | Attending training on new reporting standards and not accepting work you cannot do |
| Confidentiality | Do not disclose information obtained through professional work unless there is a legal or professional right or duty to do so, and do not use it for personal advantage | Not discussing a client’s results with friends or trading on them |
| Professional behaviour | Comply with relevant laws and avoid any conduct that discredits the profession | Not making exaggerated claims about your services |
The principles in more detail
- Integrity. Be straightforward and honest, with fair dealing and truthfulness. An accountant should not be associated with a report that he or she believes contains a materially false or misleading statement, information given recklessly, or an omission that would mislead.
- Objectivity. Do not let bias, conflict of interest or the undue influence of others compromise judgement. It is impossible to list every situation that could impair objectivity, so relationships that bias judgement should be avoided.
- Professional competence and due care. Keep knowledge and skill at the level clients and employers need, and act diligently under the technical and professional standards. Competence has two phases, attaining it and maintaining it through continuing professional development. Diligence means acting carefully, thoroughly and on time, and making sure staff are trained and supervised. Accountants should also make clear the limits of their services so that an opinion is not mistaken for a statement of fact.
- Confidentiality. Do not disclose confidential information outside the firm or employer without proper authority or a legal or professional right or duty to do so, and do not use it for personal gain or for a third party. The duty applies in social settings, to prospective clients, within the firm, and after the relationship ends. A change of job lets an accountant use experience but not confidential information.
- Professional behaviour. Comply with the law and avoid conduct that a reasonable, fully informed third party would think discredits the profession. In promoting their work, accountants must not make exaggerated claims about their services, qualifications or experience, or make disparaging comparisons with others.
When confidential information may or must be disclosed
- When the law permits it and the client or employer authorises it.
- When the law requires it, for example producing documents in legal proceedings, or reporting infringements of the law to the proper authorities.
- When there is a professional duty or right to disclose and the law does not forbid it: for a quality review by a firm or professional body, to answer an inquiry by a professional body or regulator, to protect the accountant’s own professional interests in legal proceedings, or to comply with technical and ethical standards.
Before disclosing, consider whether anyone, including third parties, could be harmed, whether the facts are known and substantiated, and whether the recipient is the right one.
Threats and safeguards
Background.
The code uses a conceptual framework. The accountant identifies threats to compliance with the fundamental principles, evaluates how significant they are, and addresses them by removing them, applying safeguards or declining or ending the work.
| Threat | Meaning | Example |
|---|---|---|
| Self-interest | A financial or other interest of the accountant improperly influences judgement | Holding shares in an audit client. Depending on one client for most fees |
| Self-review | The accountant must evaluate their own earlier work | An audit firm that prepares a client’s accounts and then audits them |
| Advocacy | The accountant promotes a client’s position so far that objectivity is compromised | Acting as the client’s advocate in a dispute and then auditing the same matter |
| Familiarity | A close relationship makes the accountant too sympathetic to others’ interests | An audit partner who has worked with the same finance director for many years |
| Intimidation | The accountant is deterred from acting objectively by actual or feared pressure | A managing director threatens to dismiss an accountant who refuses to change the figures |
Safeguards
- Created by the profession, the law or regulation: education and training requirements, professional standards, disciplinary processes, rotation of audit partners.
- In the work environment: a second partner reviews the work, a different team does the non-audit work, a firm ethics policy, and a route to raise concerns without fear.
- Personal actions: declining gifts, disclosing a conflict, consulting a senior colleague or the professional body, and documenting decisions.
If no safeguard can reduce a threat to an acceptable level, the accountant must refuse the engagement or resign from it.
Confidentiality, and when to disclose
Confidentiality is a duty, but it has exceptions. Disclosure may be permitted or required when:
- the client has agreed, and the interests of third parties are not harmed;
- the law requires it, for example to report money laundering or to comply with a court order; or
- there is a professional right or duty to disclose, such as in answer to a regulator’s inquiry or in the accountant’s own defence in a dispute.
Actions that create ethical conflicts in business
Ethical conflicts arise when actions or decisions in a company clash with ethical principles. The syllabus lists these causes:
- No clear ethical guidelines, such as a missing code of ethics or decision process.
- Conflicts of interest, when personal interests or relationships clash with the company’s.
- Unrealistic goals and pressure, which push staff to compromise standards.
- A toxic workplace culture that tolerates unethical behaviour.
- Ethical dilemmas, where every option is partly unacceptable.
Typical examples are discrimination, harassment, creative accounting, cutting corners on health and safety, and abuse of leadership authority.
Organisational values that promote ethical behaviour
The syllabus lists seven values that a workplace needs if ethical conduct is to be expected and not merely hoped for.
| Value | How it supports ethics |
|---|---|
| Accountability | People and the organisation answer for their actions and decisions |
| Communication | Open channels let people share ideas, concerns and dilemmas |
| Leadership | Leaders set the tone through ethical decisions and act as role models |
| Building trust | Trust supports collaboration and open communication |
| Open communication | Open dialogue and diverse views let ethical issues be settled constructively |
| Respect | Respect for people, their views, and for rules and laws |
| Transparency | Openness about decisions and practice builds trust and accountability |
Acting in the public interest
A professional accountant acts in the public interest when his or her work protects not only the interests of the client or employer but also those of the public. The public interest is an abstract idea about public benefit, not about what interests the public, and its true test is the confidence of the people affected.
The accountancy profession furthers it by developing technical and behavioural standards, building the training, monitoring and enforcement needed to apply them, and promoting guidance on the profession’s contribution to business and society.
The key aspects are putting societal welfare first, transparency and accountability, objectivity and impartiality, balancing competing interests, and keeping to ethical principles. Examples include rules on food safety and pollution, public education and health programmes, environmental protection and public safety law. The difficulties are that the term is hard to define and that different groups may disagree about what it requires.
Whistleblowing, bribery and corruption
Whistleblowing is reporting wrongdoing, such as fraud, corruption or danger, to someone who can act on it. Internal whistleblowing goes to a manager, the audit committee or a hotline. External whistleblowing goes to a regulator or the authorities. Staff are more willing to report when the organisation protects them from retaliation and takes reports seriously.
Nigeria has a federal whistleblowing policy, introduced in 2016, and regulators such as the Securities and Exchange Commission run whistleblowing programmes.
Bribery and corruption include offering, giving or accepting something of value to influence a decision improperly. In Nigeria, the Corrupt Practices and Other Related Offences Act 2000 and the Economic and Financial Crimes Commission (Establishment) Act 2004 are among the laws that deal with them. A gift is acceptable only if it is modest and open and cannot reasonably be seen as influencing judgement.
Building an ethical culture in an organisation
- A clear code of conduct that leaders follow themselves.
- Regular ethics training.
- A safe whistleblowing channel.
- Fair, consistent discipline for breaches.
- Rewards that do not push people to cut corners, such as unrealistic sales targets.
Corporate social responsibility
Background.The syllabus’s own treatment of corporate social responsibility (CSR) is in the next two sections. Learn those first.
Corporate social responsibility (CSR) is the idea that a business has duties beyond making a profit: to its employees, customers, community and the environment. It is closely linked to sustainability, meeting present needs without harming the ability of future generations to meet theirs.
CSR in the syllabus
CSR is a firm’s own commitment to help society, by giving, campaigning and volunteering and by running its business ethically. It has moved from voluntary decisions by individual firms towards mandatory schemes at regional, national and international levels. Being socially responsible is part of business survival.
| Type of CSR | What it involves |
|---|---|
| Philanthropy | Giving money, goods or services to good causes |
| Environmental conservation | Cutting the firm’s carbon footprint and other harm to the environment |
| Diversity and labour practices | Fair, diverse workplaces, with labour policies that apply to every employee, including senior ones |
| Volunteerism | Giving time to help local communities and charities |
Six corporate social initiatives
| Initiative | Meaning |
|---|---|
| Corporate philanthropy | Donations to charity in cash, goods or services, sometimes through a corporate foundation |
| Community volunteering | Company-organised volunteer activity, sometimes on paid time |
| Socially responsible business practices | Ethically produced products that appeal to a customer segment |
| Cause promotion and activism | Company-funded advocacy campaigns |
| Cause-related marketing | Donations to charity based on product sales |
| Corporate social marketing | Company-funded campaigns to change behaviour |
All six are forms of corporate citizenship. Philanthropy and community volunteering usually carry no profit motive. The others can be cause marketing, with both a social and a profit motive.
Benefits of CSR
- A better public image and greater brand awareness.
- Cost savings from sustainable practice, such as less packaging.
- An advantage over competitors that ignore social and environmental factors.
- More customer engagement, as buyers feel they are doing their part.
- Help in recruiting and keeping staff, and lower staff turnover, because socially responsible activity promotes fairness.
A firm can show social responsibility by building roads, bridges and schools in the towns where it works, funding research, supporting the endowment of professional chairs and sponsoring sport.
Carroll’s pyramid of CSR
| Level | Responsibility | Meaning |
|---|---|---|
| 4 (top) | Philanthropic | Be a good corporate citizen: give to the community and charity |
| 3 | Ethical | Do what is right, fair and just, even where the law does not require it |
| 2 | Legal | Obey the law |
| 1 (base) | Economic | Be profitable. Everything else depends on it |
The triple bottom line
John Elkington’s triple bottom line asks firms to measure success on three counts: profit (financial results), people (the effect on employees and society) and planet (the effect on the environment).
For and against CSR
| Arguments for | Arguments against |
|---|---|
| A good reputation attracts customers, staff and investors | Milton Friedman argued that the only social responsibility of business is to increase profits within the law, and that spending shareholders’ money on social causes is not management’s job |
| Prevents regulation and fines by avoiding harm | It costs money that could be paid to shareholders or invested |
| Builds goodwill and trust in the community | Benefits may be hard to measure and take years to appear |
| Staff are more motivated by an employer they respect | Some CSR is publicity, so-called greenwashing, with no real change |
| Supports long-term survival through sustainable practice | Managers may lack the expertise to judge social projects |
CSR in Nigeria
Many Nigerian firms spend on education, health and community projects, and large companies report on sustainability. In the oil sector, the Petroleum Industry Act 2021 requires companies to fund host community development trusts, so some responsibility has become a legal duty.
Worked example: an ethical dilemma
Scenario. Emeka is the accountant at Delta Foods Ltd. Near the year end, the managing director tells him to record next month’s deliveries as this month’s sales so that the company hits its target and the managing director earns a bonus. If Emeka refuses, the managing director says he will be dismissed. What should Emeka do?
- Identify the principles at risk. Integrity, because the figures would be false. Professional behaviour, because the request breaks accounting standards and may be unlawful.
- Name the threats. Intimidation, since the managing director has threatened dismissal. Self-interest, because Emeka’s job and the managing director’s bonus are at stake.
- Evaluate. The threats are significant, and no safeguard can make it acceptable to record sales that have not happened.
- Act. Refuse to make the entry. Explain to the managing director why it is not allowed. Keep a written note of the instruction. If the managing director persists, raise it with the audit committee or the board. Seek advice from the professional body or a lawyer. If the matter is not dealt with, consider reporting it to the regulator.
- Conclude. Emeka’s duty to the profession and the users of the accounts comes before his employer’s pressure. Resigning is a last resort.
Ethics in more detail
The fundamental principles with an example of each
| Principle | Example of compliance | Example of breach |
|---|---|---|
| Integrity | Reporting a known error in the accounts | Signing a report that contains a statement known to be false |
| Objectivity | Declining to audit a company in which you hold shares | Softening a finding because a client is a friend |
| Professional competence and due care | Keeping up to date with new standards through training | Accepting work beyond your skill without help |
| Confidentiality | Not discussing a client’s results at a social event | Using a client’s plans to trade in its shares |
| Professional behaviour | Complying with the law and advertising honestly | Making exaggerated claims about your firm |
Resolving an ethical conflict: a practical framework
- Establish the facts. What exactly is being asked, by whom, and what are the consequences?
- Identify the principles and the interests involved. Which fundamental principles are at risk and who may be harmed?
- Consider the options and their consequences. Include refusing, escalating and doing nothing.
- Apply the internal procedures. Use the firm’s policy, report to a superior or the audit committee.
- Seek advice. From the professional body, a senior colleague or a lawyer, keeping to confidentiality.
- Document the decision and the reasons.
- If the issue is not resolved, consider reporting externally where the law or the code allows, and, as a last resort, resigning.
Corporate social responsibility: the arguments
| For | Against |
|---|---|
| It improves reputation and customer loyalty | It costs money that could go to shareholders |
| It helps recruit and keep staff | It can be used as public relations with no real change |
| It reduces the risk of regulation and boycotts | Managers may spend shareholders’ money on causes of their own choosing |
| It supports the community on which the business depends | It is the government’s job to solve social problems |
A balanced view: CSR is most defensible where it ties to the business’s own interests and is done transparently, so shareholders can see its benefits and costs.
Exam focus: characteristics of ethics, professional bodies, the public interest and ethical conflicts
The syllabus gives lists for each of these, and review questions use them. Learn the headings and one explaining sentence each.
Characteristics of ethics
- A set of moral standards. They are accepted by a society and relevant only within it.
- Guides behaviour. Society disapproves of those who act against its norms, and ethics checks decisions that harm society.
- Universal in nature. It sets obligations and virtues for everyone, in business, politics and every other field.
- Differs between societies. What is ethical in one society may be unethical in another.
- Normative or prescriptive. It deals with what ought to be, not what is. It rests on principles, not on feelings of approval.
- Not always legally binding. It can be more powerful than law because it carries the sanction of society, and it shows where law falls short.
- Concerns individuals and groups. Only human beings can guide and regulate their own behaviour.
- Not hard and fast. It reflects a society’s attitudes and changes with place and time.
- No sharp boundary between ethical and unethical, so people face dilemmas where no choice is clear.
- Aims at perfection in conduct. It tests existing norms and guides lawmakers.
- Equity and justice are implicit. Fair treatment of all is its aim.
- Related to morality but not identical.
Roles of professional bodies in promoting ethics
- Establishing codes of ethics.
- Providing training and resources on ethical issues.
- Setting standards of practice that reflect ethics.
- Certification and accreditation, which signal adherence to ethical practice.
- Monitoring and enforcement: investigating complaints, holding disciplinary hearings and imposing sanctions.
- Promoting accountability through transparency and reporting of unethical practice.
- Advocating for the public interest.
- Continuous professional development, which keeps members current on ethical issues.
- Facilitating dialogue among members.
- Influencing policy and legislation.
Acting in the public interest
Acting in the public interest means acting for the common good. A professional accountant does so when work protects the interests of the public as well as those of the client or employer. The public interest is an abstract idea linked to public benefit, not to what the public is merely curious about. The true test is the confidence of those affected, not the claims of those making the decision.
The profession acts in the public interest by developing technical and behavioural standards, building structures for training, monitoring and enforcement, and promoting guidance on its contribution to business and society.
- Key aspects. Prioritising societal welfare; transparency and accountability; objectivity and impartiality; balancing competing interests; and ethical considerations such as honesty, integrity and fairness.
- Examples. Rules on food safety, pollution and sanitation to protect public health; social programmes such as education and healthcare; environmental protection; and public safety laws.
- Challenges. Defining the public interest; balancing competing interests; the influence of special interests; and balancing short-term and long-term benefits.
Causes, examples and remedies of ethical conflicts
- Causes. No clear ethical guidelines, conflicts of interest, unrealistic goals and pressure, a toxic workplace culture, and dilemmas where no option is fully acceptable.
- Examples. Discrimination; harassment; creative accounting to look more profitable; cutting corners on health and safety; abuse of leadership authority; nepotism (hiring a relative) and favouritism (treating an employee better for personal reasons); privacy, where the line between monitoring and spying is unclear; and corporate espionage, where staff steal intellectual property or give a client’s information to a competitor.
- Remedies. Set clear ethical guidelines in a code; give ethics training; encourage open communication without fear of reprisal; put in place ethical decision-making processes; and act promptly and consistently on violations.
Exam focus: corporate social responsibility in the syllabus
Corporate social responsibility (CSR) is a form of business self-regulation that contributes to societal goals through philanthropy, volunteering and ethical practice. It has moved from voluntary choices by individual firms towards mandatory schemes at national and international level. It may sit in human resources, business development or public relations, or be a separate unit reporting to the chief executive officer (CEO) or board.
Four types of CSR
- Philanthropy. Support for good causes, such as a technology company working with a charitable foundation to bring technology to communities.
- Environmental conservation. Reducing the firm’s carbon footprint and other environmental harm.
- Diversity and labour practices. Policies that apply to all staff, including senior ones, and a fair handling of complaints.
- Volunteerism. Giving time and effort to local communities and charities.
Aesthetic conservation is not one of the types. A November 2025 Section A question used it as the odd one out.
Six corporate social initiatives
- Corporate philanthropy: donations of cash, goods or services, sometimes through a corporate foundation.
- Community volunteering: volunteer activities organised by the company.
- Socially responsible business practices: ethically produced products that appeal to a customer segment.
- Cause promotions and activism: company-funded advocacy campaigns.
- Cause-related marketing: donations to charity based on product sales.
- Corporate social marketing: company-funded behaviour-change campaigns.
All six are forms of corporate citizenship. Philanthropy and community volunteering usually have no profit motive. The others can be cause marketing, with both a social interest and a profit motive.
Benefits of CSR
- Improved public image.
- Increased brand awareness and recognition.
- Cost savings, for example from less packaging.
- An advantage over competitors.
- Increased customer engagement.
- Greater employee engagement, and easier recruitment and retention of good staff.
- More benefits for employees, such as a more positive and productive workplace.
Ways a firm can be socially responsible
Build roads, bridges and schools; give employees good pay, fringe benefits, housing and medical care; provide parks and recreation centres for public use; provide health care and protect the environment; fund research and endow university chairs; sponsor sport; contribute to welfare and security in communities; and work to reduce social ills such as armed robbery, kidnapping and drug-pushing.
Common mistakes in the exam
- Naming the principle without applying it to the facts.
- Confusing threats, such as intimidation, with the principles they endanger.
- Recommending whistleblowing before raising the matter internally.
- Treating confidentiality as absolute. It has legal and professional exceptions.
- Describing CSR as only charity. Carroll’s pyramid includes economic, legal and ethical duties.
- Writing about CSR with no balance. Give arguments for and against.
Quick revision
- Five principles: integrity, objectivity, professional competence and due care, confidentiality, professional behaviour.
- Syllabus: six core values (including respect for the law), four general principles (beneficence, non-maleficence, autonomy, justice), and seven organisational values for ethics: accountability, communication, leadership, building trust, open communication, respect and transparency.
- Acting in the public interest means protecting the public as well as the client. CSR types: philanthropy, environmental conservation, diversity and labour practices, volunteerism.
- Five threats: self-interest, self-review, advocacy, familiarity, intimidation.
- Respond by removing the threat, applying safeguards, or declining the work.
- Confidentiality can be set aside with consent, by law, or by a professional right or duty to disclose.
- CSR: Carroll’s four levels (economic, legal, ethical, philanthropic) and the triple bottom line (profit, people, planet).
- Friedman argues that business exists to make profit within the law. The stakeholder view says firms owe duties to wider society.
Practice questions
These are original questions written in the style of the ICAN exam. Try each one before you open the answer.
Section A style: multiple choice
Question 1. Which of the following is NOT a fundamental principle of professional ethics for accountants?
- Integrity
- Objectivity
- Profitability
- Confidentiality
Show the answer
C. Profitability. The five principles are integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
Question 2. An accountant is asked to audit a company in which she owns shares. Which threat does this create?
- Self-interest
- Self-review
- Familiarity
- Intimidation
Show the answer
A. Self-interest. Her financial interest could improperly influence her judgement.
Question 3. A firm prepares a client’s accounts and then audits them. This is mainly a:
- Advocacy threat
- Self-review threat
- Intimidation threat
- Familiarity threat
Show the answer
B. Self-review threat. The firm would be evaluating its own work.
Question 4. In Carroll’s pyramid of corporate social responsibility, the base layer is:
- Philanthropic
- Ethical
- Legal
- Economic
Show the answer
D. Economic. A business must first be profitable, and the legal, ethical and philanthropic layers sit above it.
Question 5. The view that the only social responsibility of business is to increase profits within the law is associated with:
- Carroll
- Friedman
- Mendelow
- Maslow
Show the answer
B. Friedman.
Question 6. The ‘triple bottom line’ refers to:
- Profit, people and planet
- Cost, revenue and profit
- Debt, equity and reserves
- Price, product and promotion
Show the answer
A. It measures success on financial, social and environmental results.
Question 7. The four types of corporate social responsibility are philanthropy, environmental conservation, diversity and labour practices, and:
- Volunteerism
- Lobbying
- Advertising
- Cost cutting
Show the answer
A. Volunteerism. It means giving time to support local communities and charities.
Question 8. Which of the following is an organisational value that promotes ethical behaviour?
- Secrecy
- Transparency
- Rivalry
- Rigid hierarchy
Show the answer
B. Transparency. Openness about decisions and practice builds trust and accountability.
Question 9. A firm that discloses a client’s confidential plans to benefit a friend breaches the principle of:
- Integrity only
- Confidentiality
- Competence
- Courtesy
Show the answer
B. Confidential information must not be used or disclosed improperly.
Question 10. Keeping up to date with new accounting standards helps to meet which principle?
- Objectivity
- Professional competence and due care
- Confidentiality
- Professional behaviour
Show the answer
B. Competence must be maintained.
Question 11. The first step in resolving an ethical conflict is to:
- Resign
- Establish the facts
- Report to the press
- Do nothing
Show the answer
B. You cannot judge without the facts.
Question 12. One argument against corporate social responsibility is that it:
- Improves reputation
- Uses money that could go to shareholders
- Helps recruitment
- Builds loyalty
Show the answer
B. Cost is the main objection.
Section B style: written questions
Question 13 (10 marks). State and explain the five fundamental principles of professional ethics for accountants.
Show the marking guide
Award 2 marks for each principle: 1 for stating it and 1 for explaining it. Integrity: being straightforward and honest. Objectivity: not letting bias, conflict of interest or the influence of others override judgement. Professional competence and due care: keeping knowledge up to date and acting diligently. Confidentiality: not disclosing or misusing information gained through work, except where the law or the profession allows or requires it.
Professional behaviour: complying with the law and avoiding conduct that discredits the profession.
Question 14 (20 marks). Emeka is the accountant at Delta Foods Ltd. The managing director tells him to record next month’s deliveries as this month’s sales so that the company hits its target and the managing director earns a bonus. The managing director threatens to dismiss Emeka if he refuses.
(a) Identify the fundamental principles at risk and two threats to compliance. (6 marks)
(b) Recommend the steps Emeka should take. (8 marks)
(c) Discuss the arguments for and against a company spending on corporate social responsibility. (6 marks)
Show the marking guide
(a) 6 marks. Principles at risk (up to 4): integrity, as the figures would be false, and professional behaviour, as it breaks accounting standards and may break the law (2 marks each). Threats (2): intimidation, from the threat of dismissal, and self-interest, from the risk to his job (1 each).
(b) 8 marks. Refuse to record the entry and explain why (2). Keep a written note of the instruction (1). Raise it with the audit committee or board if the managing director persists (2). Seek advice from the professional body or a lawyer (1). Consider reporting it to the regulator if it is not resolved (1). Resignation as a last resort (1).
(c) 6 marks. For (up to 3): reputation and customer loyalty, avoiding regulation and fines, staff motivation and long-term survival. Against (up to 3): the cost to shareholders, Friedman’s view that profit is the only responsibility, and the risk that it is only publicity with no real change.
A further written question
Question 15 (10 marks). Explain what is meant by acting in the public interest.
Model answers
Show the model answer to Question 13
The five fundamental principles are these. Integrity: being straightforward and honest, and not being associated with false or misleading information. Objectivity: not allowing bias, conflict of interest or the influence of others to override professional judgement. Professional competence and due care: maintaining the knowledge and skill needed and acting diligently in line with technical and professional standards.
Confidentiality: not disclosing or using confidential information without proper authority or a legal or professional right or duty. Professional behaviour: complying with the law and avoiding conduct that would discredit the profession, including making exaggerated claims about services.
Show the model answer to Question 14
(a) Principles and threats. The principle of integrity is at risk, because Emeka would be associated with false figures. Objectivity is at risk because pressure from the managing director could override his judgement, and professional behaviour, because misstating sales breaks accounting rules. Two threats are intimidation, since he is threatened with dismissal, and self-interest, since keeping his job could tempt him to comply.
(b) Steps. Emeka should first establish the facts and confirm that recording next month’s deliveries this month is wrong. He should refuse to make the entry and explain that it would be a misstatement. He should raise the matter with a higher authority, such as the board, the audit committee or the finance director, following the company’s internal procedures.
He should keep a written record of the instruction, his objection and the response, and take advice from the professional body or a lawyer while respecting confidentiality. If the matter is not resolved, he should consider whether he must report it externally and, as a last resort, resign.
(c) Corporate social responsibility. For: it improves reputation and customer loyalty, helps recruit and keep staff, and reduces the risk of regulation and boycotts. Against: it costs money that could be returned to shareholders, may be used as public relations without real change, and some argue that social problems are for government. It is most defensible where it supports the business’s own interests and is transparent.
Show the model answer to Question 15
To act in the public interest means that a professional accountant’s work protects not only the interests of the client or employer but also those of the public, who rely on accountants for honest, accurate information. The public interest is an abstract idea about public benefit, and its true test is the confidence of the people affected.
The profession furthers it by developing technical and behavioural standards, by building the training, monitoring and enforcement needed to apply them, and by promoting guidance on its contribution to business and society. Its key aspects are putting the welfare of society first, transparency and accountability, objectivity and impartiality, balancing competing interests, and keeping to ethical principles.
The difficulty is that the term is hard to define and different groups may disagree about what it requires.
Pathfinder on ethics and corporate social responsibility
These are the ICAN Pathfinder questions that test this topic. ICAN owns the questions and the suggested solutions, so we point you to them and do not copy them. Open your Pathfinder, attempt each question under exam conditions, then check your answer against the notes above.
From the earlier Business, Management and Finance paper. Asks about reporting channels for unethical conduct, the public’s expectations of accountants, and the roles of accountancy bodies in promoting ethics.
Revise first: Exam focus: characteristics of ethics, professional bodies, the public interest and ethical conflicts
From the earlier Business, Management and Finance paper. Part (c) asks for organisational values that support the fundamental principles of ethics. The syllabus lists seven: accountability, communication, leadership, building trust, open communication, respect and transparency.
Revise first: Exam focus: characteristics of ethics, professional bodies, the public interest and ethical conflicts
From the earlier Business, Management and Finance paper. Asks for the meaning of business ethics, whistleblowing, ethical dilemma, conflict of interests and codes of ethics.
Revise first: Exam focus: characteristics of ethics, professional bodies, the public interest and ethical conflicts
From the earlier Business, Management and Finance paper. Asks for the powers of a professional accounting body, the purposes of ICAN’s code of ethics and safeguards against ethical threats.
Revise first: Exam focus: characteristics of ethics, professional bodies, the public interest and ethical conflicts
From the earlier Business, Management and Finance paper. Part (a) asks for five ethical threats to a professional accountant.
Revise first: Exam focus: characteristics of ethics, professional bodies, the public interest and ethical conflicts
Tested the types of corporate social responsibility, the fundamental principles of ethics and acting in the public interest. Revise the principles and the CSR section.
Revise first: Exam focus: characteristics of ethics, professional bodies, the public interest and ethical conflicts
Neither the May Diet, 2026 nor the November Diet, 2025 has a written question on this topic, so practise it through the multiple-choice questions. Check Section A of every diet for items on the fundamental principles, threats and CSR.
Revise first: The fundamental principles
Source: ICAN Pathfinder, Business Environment. Diets covered: May Diet, 2021 to May Diet, 2026. November Diet, 2024 is not yet mapped.
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