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By Laws

Code of Ethics




Certified Public Accountants must adhere to a code of professional ethics which provides for the maintenance of high standards of competence and integrity. They must have a clear concept of and commitment to their obligations to their profession to their clients or employers, to their colleagues in the profession, and to the public.

Section 1. Definition of Terms

Certified Public Accountant (CPA)A person who holds a valid certificate issued by the Board of Accountancy, or a firm or partnership of two or more of such persons.

Client The person or entity which retains a CPA or an accounting firm engaged in the practice of public accounting for the performance of professional services.

Enterprise Any person or entity, whether organized for profit or which CPA wherein professional services.

Firm A proprietorship or professional partnership engaged in the practice of public accounting, including individual partners thereof.

Financial statements Statements and footnotes related thereto that purport to show financial position which relate to a period and statements which use cash or other incomplete basis of accounting. Balance sheets, statements of income, statements of retained earnings, statements of changes in financial position, and statements of changes in owners’ equity are financial statements.

Section 2. Applicability of Code

Part I of the Code applies to all CPAs whether engaged in public accounting or employed in private business and industry, in the government, or in educational institutions.

Part II of the Code applies to CPAs in particular fields of accounting practice as indicated therein.


These rules shall apply to every CPA whether engaged in public accountancy or employed in private enterprise, a government agency, or an educational institution.

Section 3. Conduct in General

A certified Public Accountant (CPA) shall at all times conduct himself in a manner that upholds the honor, dignity and prestige of the accountancy profession.

Section 4. Obligation to Client, Employer and the Public

A CPA shall be guided by high ideals of personal honor in all his professional work, practicing in the spirit of fidelity to his client or employer and of loyalty to the public, While he owes fidelity to his client or employer, his obligation to the public is paramount.

Section 5. Competence

A CPA shall not undertake any engagement or accept any employment which he cannot reasonably expect to complete or discharge with professional competence. He shall continually strive to improve his knowledge, skills and techniques.

Section 6. Integrity and Objectivity

A CPA shall maintain a high degree of integrity and objectivity in all his actuations. He must be guided by a strict sense of honesty, fairness and uprightness in the exercise of his profession.

Section 7. Accounting Principles

A CPA shall see to it that financial statements, not otherwise restricted for special or internal purposes, of his client or employer are presented in conformity with generally accepted accounting principles, he shall indicate the nature of the departure, the approximate effects thereof, and the reasons why compliance with the principles would result in a misleading statement, if such is a fact.

Section 8. Confidential Information

A CPA shall not disclose any confidential information obtained in the course of a professional engagement or employment, except with the consent of his client or employer or in defense of himself if he is sued by his client or employer or when the security of the State so requires.

Section 9. Acts Discreditable to the Profession

A CPA shall not commit any act discreditable to the profession.

Section 10. Advertising

A CPA shall not advertise, or cause or allow to be advertised, his professional attainments or services, except in stating qualifications in applications for employment. However, publication of authorship of books, technical reports and studies, lectures or papers delivered in conferences and seminars and similar activities which are beneficial to the profession as a whole are not considered advertising.

Section 11. Incompatible Occupations

A CPA shall not concurrently engage in any business or occupation which impairs his objectivity in rendering professional services or which is inconsistent with his practice or employment.

Section 12. Dummy for Unqualified Person

A CPA shall not be a party to any stratagem which would permit any person not qualified nor registered with the Board of Accountancy to practice accountancy, nor shall he act as a dummy of such person.

Section 13. Social Responsibility

As a responsible citizen, a CPA shall accept his social responsibilities and engage in activities devoted to community betterment and national well-being.


Section 14. Independence

A CPA in public accounting or a firm of which he is a partner shall not express an opinion on financial statements of an enterprise unless he or his firm are independent with respect to such enterprise. Independence will be considered to be impaired if:

  1. During the period of his professional engagement, or at the time of expressing his opinion, he:

    1. Had or was committed to acquire any direct or material indirect financial interest in the enterprise; or
    2. Had any joint, closely-held business investment with the enterprise or any officer, director or principal stockholder thereof which was material in relation to his or his firm’s net worth; or
    3. Had any loan to or from the enterprise or any officer, director or principal stockholder thereof. This latter prescription does not apply to the following loans from a financial institution when made under normal lending procedures, terms and requirements:
      1. Loans obtained by him or a member of his firm which are not material in relation to the net worth of such borrower.
      2. Other secured loans, except loans guaranteed by a member’s firm which are otherwise unsecured.

  2. During the period covered by the financial statements and during the period of the professional engagement or at the time of expressing an opinion, he:

    1. Was connected with the enterprise as a promoter, underwriter or voting trustee, a director or officer or in any capacity equivalent to that of a member of management or of an employee; or
    2. Was a trustee of any trust or executor or administrator of any estate if such trust or estate had a direct or material indirect financial interest in the enterprise; or was a trustee for any pension or profit-sharing trust of the enterprise.

The above examples are not intended to be all-inclusive.

Independence may be impaired by the financial interest and business relationships of the CPA’s spouse, dependent children or any relative living in a common household with or supported by the CPA. The financial interest or business relationships of such family, dependents or relatives in a CPA’s client are ascribed to the CPA; in such circumstances the independence of the CPA or his firm would be impaired.

Section 15. Auditing Standards

A CPA in public accounting shall not permit his name to be associated with financial statements in such a manner as to imply that he is acting as an independent public accountant unless he has complied with the generally accepted auditing standards promulgated by the Board of Accountancy.

Section 16. Forecasts

A CPA in public accounting shall not permit his name to be used in conjunction with any forecast of future transactions unless:

  1. He makes full disclosures of the source of information used, the major assumptions made, the character of the work he has performed, and degree of responsibility he is taking;
  2. He states clearly that he does not vouch for the attainment of the forecast.

Section 17. Contingent Fees

A CPA in public accounting shall not offer or render Professional service under an arrangement whereby no fee will be charged unless a specified finding or result is attained, or where the fee is otherwise contingent upon the findings or results of such services. However, a CPA’s fees may vary depending on the complexity of the service rendered.

Fees are not regarded as being contingent if fixed by courts or other public authorities as in tax matters, of if determined based on the results of judicial proceedings or the findings of governmental agencies.

Section 18. Encroachment

A CPA in public accounting shall not attempt to provide a person or entity with professional service which is currently provided by another CPA except that:

  1. He may respond to a request for a proposal to render services and may furnish service to those who request it. However, if an audit client of a CPA requests an other CPA to provide professional advice on accounting or auditing matters in connection with an expression of opinion on financial statements, the latter must first consult with the former to ascertain that the latter is aware of all the available relevant facts.
  2. Where a CPA is required to express an opinion on consolidated financial statements which include a subsidiary, branch or other component audited by another CPA, he may insist on auditing any such component which in his judgment is necessary to warrant the expression of his opinion.

A CPA who receives an engagement for services by referral from another CPA shall not accept the client’s request to extend his service beyond the specific engagement without first notifying the referring CPA, nor shall he seek to obtain any additional engagement from the client.

Section 19. Offers of Employment

A CPA in public accounting shall not make a direct or indirect offer of employment to an employee of another CPA on his own behalf or that of his client without first informing such CPA. This rule shall not apply if the employee on his own initiative or in response to a public advertisement applied for employment.

Section 20. Solicitation and Advertising

A CPA in public accounting shall not seek to obtain clients by solicitation.

Advertising is a form of solicitation. Publication of an announcement is permitted only for opening of a new office, change in partners, change in office location or telephone number(s), or reorganization of firm or practice; provided it contains basic information essential to the announcement and is of reasonable size.

Announcement of any of the above information may also be made to clients and to individuals other than clients with whom professional contacts are maintained.
Listing of firm name in lobby directory of an office building and on entrance door solely for the purpose of enabling interested parties to locate an office is permissible but must be in good taste and modest in size.

The stationer of firm should be in keeping with the dignity of the profession and should not mention any specialty. It may include the firm name, address, telephone number, tax account number, names of partners, and membership in professional societies.

Listing in a telephone, business or other directory may appear in the alphabetic section and/or in the business (yellow page) section under the CPA classification. It shall not be in bold type or in box or other display form.

Firm publication or brochures may be distributed to clients and to individuals other than clients with whom professional contacts are maintained.

Section 21. Commission

A CPA in public accounting shall not pay or offer to pay a commission to obtain a client, nor shall he accept or agree to a commission for a referral to a client of products or services of others. This rule shall not prohibit payments for the purchase of an accounting practice of retirement payments to individuals formerly engaged in the practice of public accounting or payments to their heirs or estates.

Section 22. Form of Practice and Name

A CPA may practice public accounting, whether as an owner or employee, only in the form of proprietorship or partnership.

A CPA shall not practice under a firm name which includes any fictitious name, indicates specialization or is misleading as to the type of organization (proprietorship or partnership). However, the name of one or more past partners may be included in the firm name of a successor partnership.

A partner surviving the death or withdrawal of all other partner may continue to practice under the partnership name for two years after becoming a sole practitioner.

Section 23. Acts Discreditable to the Profession

A CPA shall be held guilty of an act discreditable to the profession, if in expressing an opinion or representation in financial statements which he has examined:

  1. He fails to disclose a material fact known to him which is not disclosed in the financial statements but disclosure of which is necessary to make the financial statements not misleading; or
  2. He fails to report any material misstatement to him to appear in the financial statements; or
  3. He is grossly negligent in the conduct of his examination or in making his report thereon; or
  4. He fails to acquire sufficient information to warrant expression of an opinion, or his exceptions are sufficiently material to negate the expression of an opinion; or
  5. He fails to direct attention to any material departure from generally accepted accounting principles or to disclose any material omission of generally accepted auditing procedures applicable in the circumstances.

Whenever a CPA believes that the financial statements are false or misleading in any significant respect, he should either require adjustment of the accounts or adequate disclosure of the facts, as the case may be; otherwise he should not permit his name to be associated with the statements in any way.


Section 24. Responsibility to apprise employer of profession and ethical standards

A CPA in private industry shall see to it that his employer is made aware of his responsibilities as a member of the accountancy profession in terms of keeping up to its technical and ethical standards.

Section 25. Conflict of Interest

A CPA shall not concurrently engage in business or activity which impairs his professional competence or which would give rise to a conflict of interest between him and his employer.

Section 26. Act Discreditable

A CPA commits an act discreditable to the profession and shall be held liable of such act if in the performance of his work:

  1. He is grossly negligent in performing his job such that material misstatement of financial information results;
  2. He willfully and without justification works against the legitimate interest of his employer;
  3. He commits, or abets with his employer the commission of, any dishonest act of whatever nature;
  4. He fails to observe or to direct attention to non-observance of generally accepted accounting principles in situations calling for such observance;
  5. He fails to present or to disclose material, financial facts in connection with the computation of the of the tax liabilities of his employer, but presentation or disclosure of which is necessary to make the computation not fraudulent;
  6. He fails to present fairly financial statements required by any government regulation or agency; or to make adequate disclosures if the financial statements do not present fairly financial condition or results of operations;
  7. He fails to present fairly financial data or information on reports prepared by him or under supervision; or to make adequate disclosure so that the financial report will not be misleading; and
  8. He refuses to cooperate, without valid reason, with the external auditor in the examination of the accounts of his employer for the specific purpose of the engagement.

The acts cited in the foregoing are not intended to be all inclusive.


Section 27. Public Office is a Public Trust

A CPA in the government service shall endeavor to perform his official duties thoroughly, faithfully and efficiently, ever conscious that a public office is a public trust.

Section 28. Service to the Public

A CPA in the government service shall serve the public courteously, justly and impartially regardless of kindship, friendship, social standing, or religious or political beliefs.

Section 29. Civil Service Rules

A CPA in the government service shall, at all times, comply with Civil Service Rules, as well as with regulations prescribed by the duly constituted authorities.


Section 30. Contribution to Attainment of Institutional Objective

A CPA in education shall aim to contribute to the attainment of the academic objectives and policies of the institution.

Section 31. Responsibility for Professional Competence

A CPA in education has the responsibility of achieving professional competence as a teacher or administrator.

Section 32. Concern for Student Welfare

A CPA in education shall have at heart the welfare of the students, stimulating in them a deep interest in their studies, exposing them to meaningful experiences in life and inculcating in their young minds the ideals of honor, justice and morality.

Section 33. Effectiveness of Teaching Profession

A CPA in education shall contribute to the effectiveness, enrichment and dignity of the teaching profession.

Section 34. Leadership in Research and Professional Matters

A CPA in education shall accept a reasonable degree of responsibility for leadership in research in professional matters, and in co-curricular and extra-curricular affairs in the institutions.

Section 35. Effectivity

These rules shall take effect immediately.

Promulgated by the Board of Accountancy on March 15, 1978.


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