A client asks you to sign its tax return, but it will not show you the invoices behind the expenses. Another client wants you to be paid 20% of whatever tax you save it. A third has told you something in confidence, and now the tax authority has written to you asking for it. A fourth is a competitor of your largest client and wants the same advice.
None of these needs technical tax knowledge to answer. Each needs a decision about what a professional accountant may and may not do, and the exam sets exactly these cases in the “ethics” question.
This topic covers the five fundamental principles of the International Ethics Standards Board for Accountants (IESBA) code, when a client’s information may be disclosed, conflicts of interest, the legal and ethical issues that arise in tax work, enforcement and penalties, threats and safeguards, the steps to take on non-compliance with laws and regulations (NOCLAR), and the ethics of data privacy under the Nigeria Data Protection Act 2023.
The previous topic covered tax audit and investigation. The next covers tax accounting and reporting.
In 30 seconds
Five principles: integrity, objectivity, professional competence and due care, confidentiality, professional behaviour. Confidential information may be disclosed only where the law permits or requires, the client authorises it, or there is a professional duty or right (for example to answer ICAN or CITN). Five threats: self-interest, self-review, advocacy, familiarity, intimidation. Safeguards come from the profession and law, and from the work environment.
NOCLAR steps: become aware, understand the matter, address it with management and those charged with governance, tell the external auditor, consider further action in the public interest, document. Data privacy:
- the Nigeria Data Protection Act 2023 and the 2025 Directive
- breaches to be notified to the Commission within 72 hours
- fines up to the higher of ₦10 million or 2% of annual gross revenue (major importance) or ₦2 million or 2% (others)
Key terms in plain English
| Term | What it means |
|---|---|
| IESBA | The board that sets the international code of ethics for accountants, within the International Federation of Accountants |
| Integrity | Being direct and honest, and not linked to false or misleading information |
| Objectivity | Not letting bias, conflict of interest or undue influence override judgment |
| Confidentiality | Not disclosing or using information gained from the relationship without authority |
| Self-review threat | Judging the results of one’s own earlier work |
| Safeguard | A measure that removes a threat or reduces it to an acceptable level |
| NOCLAR | Non-compliance, or suspected non-compliance, with laws and regulations |
| Data subject | The person whose personal data is processed |
| Data controller | The person who decides why and how personal data is processed |
Syllabus check
This topic is in syllabus area E (tax management and planning, 10% of marks). It covers:
- the five principles, disclosure of taxpayers’ information and conflicts of interest;
- legal and ethical issues in tax work, enforcement, threats and safeguards, and NOCLAR;
- ethical issues in data privacy.
CAMA 2020 and ethics in tax
The Companies and Allied Matters Act 2020 (CAMA 2020) is the company law of Nigeria. The sections below apply to this topic.
| Section | What it says | Link to this topic |
|---|---|---|
| s. 305 and s. 308 | Directors must act in good faith in the interest of the company and with the care, diligence and skill of a prudent director | Directors who press an adviser to sign a return that is not supported are in breach, and the adviser must resist |
| s. 377(1) and s. 378 | Directors prepare financial statements that give a true and fair view | The accountant must not be linked to statements or returns that are false or misleading |
| s. 119 | A person with significant control must notify the company within seven days | Hidden ownership is a red flag that the practitioner must raise with the client |
The rules in more depth
The five fundamental principles
| Principle | What it requires |
|---|---|
| Integrity | Be direct and honest in all professional and business relationships, with fair dealing and truthfulness. Do not knowingly be associated with reports, returns or communications that contain a materially false or misleading statement, or that were provided recklessly. |
| Objectivity | Do not let bias, conflict of interest or undue influence override professional or business judgment. Do not take on an activity if a circumstance or relationship unduly influences judgment. A practitioner may advance the client’s position, but only in a way that complies with standards, laws and regulations. |
| Professional competence and due care | Keep knowledge and skill at the level needed for competent service, based on current legislation and standards, and act diligently. Do not accept work that you cannot do without help from a qualified specialist. |
| Confidentiality | Respect the confidentiality of information from professional and business relationships. Do not disclose it outside the firm or employer without proper and specific authority, unless there is a legal or professional right or duty to disclose, and do not use it for personal advantage or that of third parties. The duty continues after the relationship ends; you may use your general experience on a new client but not the old client’s confidential details. |
| Professional behaviour | Comply with laws and regulations and avoid conduct that you know, or should know, might discredit the profession. Do not tolerate, help or encourage tax evasion. Advise the client not to enter an arrangement that you reasonably believe could result in evasion, and withdraw from the engagement if the client will not follow your advice. |
IFAC’s mission is to serve the public interest and strengthen the profession; ICAN has adopted the IESBA code, and the principles are enforceable, not optional.
Disclosure of taxpayers’ information
You may disclose information about a client, past or present, only when:
- disclosure is permitted by law;
- the client authorises it;
- disclosure is required by law, for example giving documents or evidence in legal proceedings or reporting breaches of the law to the proper public authorities; or
- there is a professional duty or right to disclose when the law does not forbid it: answering an enquiry or investigation by ICAN or CITN, protecting the professional interests of the body in legal proceedings, or complying with technical and ethical standards.
Conflict of interest
A conflict threatens objectivity and may threaten other principles.
It arises when the practitioner works on one matter for two or more clients whose interests conflict, or when the practitioner’s own interest conflicts with a client’s. What to do:
- resolve it in line with the fundamental principles
- record the issue, the discussions and the decisions
- if it cannot be resolved, take advice from ICAN or CITN (anonymously, or from a lawyer under privilege, so confidentiality is kept)
- if it is still unresolved, refuse to stay associated with the matter, which may mean withdrawing from the assignment or the client
Legal and ethical issues in tax work
| Group | Examples |
|---|---|
| Competence and enquiry | Failing to keep up to date; failing to research a problem; failing to make reasonable enquiries when a client’s information looks wrong or incomplete; preparing and signing a return without seeing the documents |
| Honesty and reporting | Continuing to act where a client will not correct misleading information; ignoring a clear error in a prior year return; taking aggressive positions on the assumption that the authority will not detect them (the “tax audit lottery”); structuring a return to reduce the chance of audit; misleading or inadequate advice on risk |
| Avoidance and planning | Telling legitimate planning from avoidance schemes; loophole seeking; tax minimisation with no commercial or family purpose; not reporting blatant avoidance arrangements as part of the practitioner’s public responsibility |
| Independence and judgment | Following a client’s instruction against professional judgment; deciding who makes the final reporting decision on contentious items; failing to pass on unfavourable as well as favourable news |
| Fees and conduct | Setting a fee as a share of the tax saved (a contingent fee); poaching clients; personal gain; misrepresenting one’s competence; handling client funds such as a refund cheque without authority |
| Conflict and secrecy | Acting for competing clients; failing to protect privileged information; failing to supervise the client’s dealings with a tax audit |
| Authority’s errors | Staying silent about a clear and significant mistake of the authority in the client’s favour |
Enforcement and penalties
- The Institute enforces ethics under the Institute of Chartered Accountants of Nigeria Act, through the Accountants Disciplinary Tribunal, which is independent of Council.
- The Investigating Panel considers complaints on members’ conduct and refers cases to the Tribunal.
- A complaint about a firm with more than one partner is treated as made against each partner at the time.
- The Committee that regulates members and firms also considers failures to follow the fundamental principles.
Sanctions: a fine; suspension from membership for a period; expulsion; withdrawal of certificate and licence to practise; a reprimand; and payment of the costs of investigation and meetings.
Threats and safeguards
| Threat | Meaning and example |
|---|---|
| Self-interest | A financial or other interest influences judgment, for example heavy dependence on one client’s fees |
| Self-review | The accountant cannot fairly evaluate a judgment or service he or his firm gave earlier |
| Advocacy | Promoting a client’s or employer’s position until objectivity is lost |
| Familiarity | A long or close relationship makes the accountant too sympathetic or too trusting |
| Intimidation | Pressure, actual or perceived, such as a threat of dismissal from the engagement |
Safeguards eliminate a threat or cut it to an acceptable level. Those created by the profession, legislation or regulation include continuing professional development, professional standards and corporate governance rules. Those in the work environment include leadership and transparency and the recruitment of high-calibre staff.
NOCLAR
When a professional accountant meets acts or suspected acts of non-compliance with law, he has a prima facie duty not to turn a blind eye. IESBA issued the NOCLAR pronouncement to guide responses in the public interest.
The objective is to comply with integrity and professional behaviour while thinking of the public interest. The aim is that the entity corrects the non-compliance, or prevents it where it is only suspected.
Professional accountant in tax practice:
- Become aware (see it, but do not seek it).
- Obtain an understanding of the matter.
- Address it with management and those charged with governance.
- Communicate it to the entity’s external auditor.
- Consider whether more action is needed in the public interest, such as disclosing to the authorities or withdrawing from the engagement.
- Document the matter, the discussions and the action taken.
Professional accountant in business (not senior): follow the organisation’s protocols; inform the immediate superior; if the superior seems involved, go to the next higher level; in exceptional cases disclose to an appropriate authority; document. Senior professional accountants (directors, officers or senior employees with significant influence over resources) become aware, understand, address the matter, decide on further action, decide whether to disclose to an authority, and document.
Data privacy
The Nigeria Data Protection Act (NDPA) 2023, with the General Application and Implementation Directive 2025, which took effect on 19 September 2025 and ended the Nigeria Data Protection Regulation 2019, governs personal data in tax work.
- Principles: lawfulness, fairness and transparency; purpose limitation; data minimisation; accuracy; storage limitation; integrity and confidentiality; accountability.
- Consent: informed, for collection and processing.
- Handling: data protection by design; impact assessments for high-risk processing; notify the Nigeria Data Protection Commission of a breach within 72 hours of becoming aware, and tell data subjects immediately where the risk is high.
- Rights: to information, access, rectification, erasure, objection and data portability.
- Controllers and processors of major importance: must register with the Commission and appoint a data protection officer; staff should be trained.
- Penalties: the Commission may fine a controller or processor of major importance up to the higher of ₦10 million and 2% of annual gross revenue of the preceding year, and others up to the higher of ₦2 million and 2%.
For a tax practitioner this means collecting only the data needed for the engagement, keeping it safe, sharing it only with those authorised and reporting a breach in time.
Worked examples
Example 1: which principle? (a) A client will not show the invoices behind its expense claims but wants the return signed. (b) A practitioner uses one client’s confidential margins to advise its competitor.
- (a) Integrity and due care: he must not be linked to a return he believes may be false, must make reasonable enquiries, and should decline to sign without the documents.
- (b) Confidentiality and objectivity: use of confidential information for another client’s advantage is forbidden, and the two clients’ interests conflict.
Example 2: a contingent fee. A client offers to pay a firm 20% of any tax it saves.
- The threat is self-interest: the firm’s income rises with aggressive positions.
- Safeguards: set the fee on time and skill, not on the saving, and take a second partner’s review of any aggressive position.
- If the client insists on an arrangement that may be evasion, withdraw.
Example 3: disclosure to the authority. The NRS writes to a practitioner asking for a client’s payroll records, with no notice to the client and no court order.
- Confidentiality is not lost by the request alone.
- Disclose only if the law requires it, or the client authorises it. Ask the authority for the legal basis, and take advice from ICAN or a lawyer anonymously if unsure.
- Record the decision and the reasons.
Example 4: the 72 hours. A firm learns at 9:00 on Monday that a laptop with client tax files was stolen and the files were not encrypted.
- The breach is likely to risk the rights of data subjects.
- It must tell the Commission by 9:00 on Thursday, within 72 hours of becoming aware, and the data subjects immediately.
- It should also record the incident and fix the controls.
How to score full marks
- Name the principle breached and say why, in a sentence.
- Identify the threat category when a scenario has pressure, fees or familiarity.
- Offer a safeguard and a step to take, not only a label.
- Follow the NOCLAR sequence in order.
- Give the 72 hours and the NDPA penalties for data questions.
Common mistakes in the exam
- Writing four principles, not five.
- Saying confidentiality ends when the engagement ends.
- Confusing self-interest with self-review threats.
- Forgetting that the professional must withdraw if the client insists on evasion.
- Citing the Nigeria Data Protection Regulation as the current law.
- Giving a 24-hour or 7-day breach window.
Quick revision
- Principles: integrity, objectivity, competence and due care, confidentiality, professional behaviour.
- Disclosure: law permits, client authorises, law requires, professional duty or right.
- Threats: self-interest, self-review, advocacy, familiarity, intimidation.
- NOCLAR: aware, understand, address, auditor, public interest, document.
- NDPA 2023: 72 hours; fines of ₦10m or 2%, ₦2m or 2%.
- CAMA 2020: ss. 119, 305, 308, 377(1), 378.
Practice questions
These are original questions written in the style of the Institute of Chartered Accountants of Nigeria (ICAN) exam. Try each one before you open the answer. Full model answers follow the written questions.
Recall check: multiple choice
Recent ICAN papers are written, although older papers such as May 2014 included multiple-choice questions. These questions are for quick recall. The written questions that follow are closer to the exam.
Question 1. How many fundamental principles are there in the IESBA code?
- Three
- Four
- Five
- Seven
Show the answer
C. Five.
Question 2. Which principle requires a practitioner to refuse to be linked to false returns?
- Integrity
- Confidentiality
- Familiarity
- Advocacy
Show the answer
A. Integrity.
Question 3. The duty of confidentiality:
- Ends when the engagement ends
- Continues after the engagement ends
- Applies only to clients
- Applies only in court
Show the answer
B. It continues after the engagement ends.
Question 4. Disclosure of client information is allowed when:
- The practitioner is curious
- The client authorises it
- A competitor asks
- A friend asks
Show the answer
B. Client authority, legal permission or requirement, or a professional duty or right.
Question 5. A fee based on a share of the tax saved is mainly a threat of:
- Self-review
- Self-interest
- Familiarity
- Intimidation
Show the answer
B. Self-interest.
Question 6. The threat from a long and close relationship with a client is:
- Advocacy
- Familiarity
- Self-review
- Intimidation
Show the answer
B. Familiarity.
Question 7. The first NOCLAR step for a practitioner is to:
- Report to the police
- Become aware of the matter
- Resign at once
- Tell the media
Show the answer
B. See it, but do not seek it.
Question 8. Under the NDPA 2023 a breach must be notified to the Commission within:
- 24 hours
- 48 hours
- 72 hours
- 7 days
Show the answer
C. 72 hours.
Question 9. The body that disciplines ICAN members is the:
- Tax Appeal Tribunal
- Accountants Disciplinary Tribunal
- Federal High Court
- Joint Tax Board
Show the answer
B. The Accountants Disciplinary Tribunal.
Question 10. Which section of CAMA 2020 sets the director's duty of care, diligence and skill?
- Section 119
- Section 308
- Section 426
- Section 433
Show the answer
B. Section 308.
Written questions
Question 11 (10 marks). (a) State the five fundamental principles of ethics. (5 marks) (b) State the circumstances in which a practitioner may disclose a client’s information. (5 marks)
Question 12 (20 marks). (a) Discuss eight ethical issues that could arise in a tax engagement. (8 marks) (b) State the steps a professional accountant in tax practice should take on finding a breach of tax law. (6 marks) (c) State the sanctions for a member’s breach of ethical standards. (6 marks)
Question 13 (10 marks). (a) State the principles and the rights of data subjects under the Nigeria Data Protection Act 2023. (6 marks) (b) State the breach notification rule and the penalties. (4 marks)
Model answers
Show the model answer to Question 11
(a) Principles (5 marks). Integrity; objectivity; professional competence and due care; confidentiality; professional behaviour. (1 each)
(b) Disclosure (5 marks). When the law permits it; (1) the client authorises it; (1) the law requires it, for example evidence in legal proceedings or reporting breaches to public authorities; (2) there is a professional duty or right, for example answering an enquiry by ICAN or CITN. (1)
Show the model answer to Question 12
(a) Issues (8 marks). Any eight, 1 mark each with a phrase:
- lack of technical competence
- failure to make reasonable enquiry
- continuing to act where the client will not correct information
- avoidance against planning
- loophole seeking
- contingent fees
- aggressive positions in the audit lottery
- misleading advice
- misrepresenting competence
- personal gain
- conflict of interest
- signing a return without documents
- not reporting unfavourable news
- silence on the authority’s clear error
- poaching clients
- handling client funds without authority
- failing to correct prior year errors
- breach of confidentiality
(b) Steps (6 marks). Become aware; understand the matter; address it with management and those charged with governance; tell the external auditor; consider further action in the public interest, such as disclosure to authorities or withdrawal; document. (1 each)
(c) Sanctions (6 marks). A fine; suspension from membership; expulsion; withdrawal of certificate and licence to practise; a reprimand; payment of the costs of the investigation. (1 each)
Show the model answer to Question 13
(a) Principles and rights (6 marks). Principles: lawfulness, fairness and transparency; purpose limitation; data minimisation; storage limitation; accuracy; integrity and confidentiality; accountability. (3) Rights: information, access, rectification, erasure, objection and data portability. (3)
(b) Breach and penalties (4 marks). Notify the Commission within 72 hours of becoming aware and tell data subjects immediately if the risk is high. (2) Fines of up to the higher of ₦10 million or 2% of annual gross revenue for a controller or processor of major importance, and the higher of ₦2 million or 2% for others. (2)
Pathfinder on The five principles, threats and safeguards, disclosure, conflicts, NOCLAR and data protection
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.
Part (c) asked in what circumstances a tax consultant may disclose a taxpayer’s information to a third party: when the law permits it, when the client authorises it and when there is a professional duty or right to disclose.
Revise first: Disclosure of taxpayers’ information
The question asked for the categories of threat to the fundamental principles, safeguards, specific legal and ethical issues in tax work, and the powers of ICAN to enforce ethical standards. Our sections on threats and safeguards, legal and ethical issues, and enforcement cover each part.
Revise first: Threats and safeguards
Part (b) asked for four IESBA fundamental principles with an explanation of each. See our section on the five fundamental principles.
Revise first: The five fundamental principles
The question gave a tax engagement with several problems and asked for the legal and ethical issues it raised, such as conflict of interest, contingent fees, failure to contact the outgoing consultant and breach of objectivity, and the penalties the Institute can impose. Use our sections on legal and ethical issues and on enforcement.
Revise first: Legal and ethical issues in tax work
Source: ICAN Pathfinder, Advanced Taxation. Diets covered: November Diet, 2024; May Diet, 2024; November Diet, 2023 and May Diet, 2022.
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