The fundamental ethical principles in financial reporting are designed to ensure accuracy, transparency, and integrity in presenting financial information. These principles guide accountants, auditors, and financial professionals to uphold public trust. They are typically aligned with the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA). The key principles include:
- Integrity
Financial professionals must be honest and straightforward in all professional relationships. They should avoid actions that may mislead or distort the presentation of financial information. - Objectivity
Avoid biases, conflicts of interest, or undue influence that could compromise professional judgment. Decisions and reporting must be impartial and based solely on factual data. - Professional Competence and Due Care
Maintain professional knowledge and skills to ensure competent service delivery and compliance with current standards, laws, and regulations. This also includes acting diligently and responsibly. - Confidentiality
Respect the confidentiality of financial information obtained during professional work. Such information should not be disclosed without proper authority or used for personal advantage. - Professional Behavior
Comply with laws, regulations, and standards while avoiding actions that discredit the profession. Professionals should uphold the reputation of their field. - Transparency
Present financial information clearly and accurately to stakeholders, ensuring that all material facts are disclosed to enable informed decision-making. - Accountability
Financial professionals must take responsibility for their actions and decisions, ensuring they align with ethical practices and organizational goals.
These principles are essential for fostering trust among stakeholders, ensuring fair and reliable financial reporting, and maintaining the integrity of financial markets.
