Question

There are two main approaches to a code of professional ethics: a rules-based ethical code and a code based upon a set of principles. Indicate whether the following statements are true or false.

A code based upon a set of principles requires a professional accountant to comply with a set of specific rules.
A True B False
A rules-based code requires a professional accountant to identify, evaluate and address threats to compliance with fundamental ethical principles.
C True D False
The ICAEW uses a rules-based approach.
E True F False

Answer 1

A code based upon a set of principles does not require compliance with specific rules, while a rules-based code does. The ICAEW does not use a rules-based approach to its code of professional ethics.

Step-by-step explanation:

A code based upon a set of principles does not require a professional accountant to comply with a set of specific rules. This approach focuses on general principles that guide ethical decision-making, rather than providing explicit rules for every situation. Therefore, the statement is False.

A rules-based code, on the other hand, requires a professional accountant to identify, evaluate, and address threats to compliance with fundamental ethical principles. This approach emphasizes following specific rules and guidelines to ensure ethical behavior. Therefore, the statement is True.

The ICAEW (Institute of Chartered Accountants in England and Wales) does not use a rules-based approach to its code of professional ethics. The ICAEW's code is based on a set of principles and encourages professional accountants to exercise professional judgment and adhere to these principles. Therefore, the statement is False.