The fundamental principles of the code of ethics

Every professional accountant must comply with five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. The code then requires you to identify threats to those principles, judge whether each threat is at an acceptable level using the reasonable and informed third party test, and eliminate or reduce it, or decline the work.

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Where do the fundamental principles come from?

The principles appear in the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA). ICAEW explains that its own code is based on the IESBA code, and that the main accountancy bodies, including ICAEW and the other CCAB bodies, are required to comply with the principles in it. The current edition of the ICAEW Code of Ethics came into force on 1 July 2026 and applies to members, students, affiliates, employees of member firms and, where applicable, member firms.

The principles are in section 110 of the code. Paragraph R110.2 says simply that a professional accountant shall comply with each of them. Subsections 111 to 115 then set out the detailed requirements for each one, and section 120 sets out the conceptual framework for applying them. Tax work carries extra guidance in Professional Conduct in Relation to Taxation.

What do the five principles require?

Integrity (subsection 111)

To be straightforward and honest in all professional and business relationships. The code says integrity involves fair dealing, truthfulness and the strength of character to act appropriately even under pressure. Under R111.2 you must not knowingly be associated with reports, returns or other information that you believe contain a materially false or misleading statement, contain information provided recklessly, or omit or obscure required information in a misleading way. If you find you have been, R111.3 requires you to take steps to disassociate yourself.

Objectivity (subsection 112)

To exercise professional or business judgement without being compromised by bias, conflict of interest, or undue influence of, or undue reliance on, individuals, organisations, technology or other factors. The reference to technology means relying uncritically on software or automated tools can be an objectivity issue. R112.2 says you must not undertake work if a circumstance or relationship unduly influences your judgement.

Professional competence and due care (subsection 113)

To attain and maintain the knowledge and skill needed for competent service, based on current standards and legislation, and to act diligently. The code says diligence means acting carefully, thoroughly and on a timely basis. R113.2 requires reasonable steps to ensure staff working under your authority are trained and supervised, and R113.3 requires you, where appropriate, to make clients aware of the limitations of your work.

Confidentiality (subsection 114)

To respect the confidentiality of information acquired in professional and business relationships. The code suggests assuming that all unpublished information about a client’s affairs, however gained, is confidential. The duty covers prospective clients, information within the firm, and inadvertent disclosure in social settings, and under R114.4 it continues after the relationship ends. R114.3 allows disclosure where there is a legal or professional duty or right to disclose, or where the client authorises it and the law does not prohibit it.

Professional behaviour (subsection 115)

To comply with relevant laws and regulations, behave consistently with the profession’s responsibility to act in the public interest, and avoid conduct you know or should know might discredit the profession. The code says a reasonable and informed third party would expect an accountant to treat others fairly and not bully, harass, victimise or unfairly discriminate. R115.2 bans exaggerated claims and disparaging comparisons in marketing.

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How does the conceptual framework work?

Section 120 requires you to identify, evaluate and address threats to the principles. R120.5 requires an inquiring mind, professional judgement and the reasonable and informed third party test. Paragraph 120.6 A3 groups threats into five categories:

Threat	Meaning in the code	Everyday example
Self interest	A financial or other interest inappropriately influences judgement or behaviour	A large client who provides much of the fee income
Self review	Not appropriately evaluating earlier work you will rely on	Checking figures your own team prepared
Advocacy	Promoting a client’s position until objectivity is compromised	Arguing a client’s case to a lender or HMRC
Familiarity	A long or close relationship makes you too sympathetic or too accepting	A client you have acted for over many years, or a relative
Intimidation	Actual or perceived pressure deters you from acting objectively	A client threatening to leave unless a figure is changed

A threat is at an acceptable level if a reasonable and informed third party would likely conclude that you comply with the principles. That third party need not be an accountant, but would have the knowledge to judge your conclusion impartially. If a threat is not acceptable, R120.10 requires you to eliminate the circumstances creating it, apply safeguards, or decline or end the work. Under R120.11 you then form an overall conclusion on whether your actions are enough.

How do the principles apply to everyday practice decisions?

Pricing. Paragraph 330.3 A2 says quoting a lower fee than another accountant is not unethical in itself, but a fee so low that the work cannot be done properly creates a self interest threat to competence and due care. Safeguards include adjusting the fee or scope, or having the work reviewed. R330.4 requires you to explain the basis of fees at the earliest opportunity; see engagement letters.
Taking on work outside your experience. Competence requires the necessary knowledge, so either acquire it, bring in a specialist or decline.
Changing accountant. Confidentiality and professional behaviour govern what the old and new firms share; see professional clearance.
Suspicions of money laundering. Section 330 of the Proceeds of Crime Act 2002 makes it an offence in the regulated sector not to disclose knowledge or suspicion of money laundering to the firm’s nominated officer or the National Crime Agency, so a report falls within the R114.3 exception for a legal duty to disclose. See suspicious activity reports.
Data security and AI tools. The confidentiality principle extends to protecting information when it is collected, used, transferred, stored and destroyed. Code paragraph 114.3 A3 also covers obtaining authority before client information is used for training or technology development. See data protection for accountancy practices.
Social media and conduct outside work. Conduct that a reasonable and informed third party would see as damaging the profession’s reputation can breach professional behaviour.

What if two principles conflict?

Paragraph 110.2 A2 recognises that complying with one principle can conflict with another. The code suggests consulting, anonymously if necessary, with others in the firm, those charged with governance, a professional body, a regulator or legal counsel. Consultation does not remove your own responsibility to resolve the conflict or, unless the law prohibits it, to disassociate from the matter. Paragraph 110.2 A3 encourages you to record the issue, the discussions, the decisions and the reasons.

Illustration only

A client asks you to sign off accounts that include stock at a value you think is overstated, and says it will move its group work elsewhere if you refuse. This is an intimidation threat and a self interest threat to integrity and objectivity. Because the problem is the figure, the threat can be addressed by having the valuation supported or corrected. If the client refuses, R111.2 means you cannot be associated with accounts you believe are materially misleading, and R120.10 leaves you to decline or end the engagement. A note of the discussion and your reasons protects you if the decision is later questioned.

What happens if you breach the principles?

ICAEW says failure to follow the code may make a member liable to disciplinary action, and that it assesses all complaints to decide whether they are a disciplinary matter. For audits under ISAs (UK), the FRC Ethical Standard applies instead of the detailed independence requirements in Part 4A of the ICAEW code, but the fundamental principles still apply. See also ICAEW practising certificates.

What mistakes do practitioners make?

Treating the principles as abstract rather than testing each new engagement against them.
Assuming confidentiality ends when the client leaves.
Agreeing fees before scoping the work.
Relying on a long relationship instead of evidence, which is a familiarity threat.
Failing to document how a threat was identified and dealt with.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.