Professional ethics and ACCA code - Professional competence ...

Learning Outcomes

After reading this article, you will be able to explain the meaning of professional competence and due care within ACCA's Code of Ethics and Conduct. You will understand how these principles guide the behaviour and professional responsibilities of accountants and auditors, identify key requirements for maintaining competence, and apply these principles to typical ACCA exam situations.

ACCA Foundations in Audit (FAU) Syllabus

For ACCA Foundations in Audit (FAU), you are required to understand the ethical obligations that shape professional behaviour. Focus your revision on:

• The role of professional ethics and ACCA’s Code of Ethics and Conduct
• The meaning and practical application of professional competence and due care
• Accountants’ and auditors’ duties to maintain technical knowledge and skill
• Recognising the importance of diligence and keeping up to date with professional standards and regulations
• How breaches of these principles can affect audit quality and exam performance

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What does the principle of professional competence and due care require from an accountant or auditor?
   1. Only acting when paid more
   2. Maintaining up-to-date knowledge and skills
   3. Delegating all complex work
   4. Disregarding recent legislation
2. Which of the following is NOT covered by professional competence and due care?
   1. Attending regular training
   2. Using outdated legal standards
   3. Acting diligently
   4. Following current professional guidelines

3. True or false? Once a professional accountant is qualified, there is no requirement to update their knowledge.

4. Briefly explain what is meant by 'due care' in the context of the auditing profession.

Introduction

Ethical principles are central to the accounting and audit profession. Among them, professional competence and due care are fundamental for ensuring public trust. Regulators, employers, and clients expect accountants to demonstrate high standards of knowledge and diligence. For ACCA candidates, a clear understanding of these duties—and their implications—will help you answer exam questions both factually and in applied scenarios.

Key Term: professional competence and due care
The ethical principle requiring a professional accountant to maintain up-to-date technical knowledge and skill, and to act diligently and in line with current professional standards and legislation.

Professional Competence and Due Care: Meaning and Scope

The Principle Explained

Professional competence and due care form one of ACCA's five fundamental ethical principles. It ensures accountants provide services capably and responsibly throughout their careers—not just at the point of qualification.

This principle expects accountants to:

• Achieve a reliable level of initial knowledge and skill
• Keep their competence up to date with ongoing training and development
• Apply care and attention in delivering professional services

Two Components

There are two interconnected parts:

1. Professional Competence: Ongoing development of technical and professional knowledge, ensuring accountants can deliver work to a standard expected by clients, employers, and regulators.
2. Due Care: Performing work carefully and thoroughly, in line with accepted standards—even under time pressure or when performing routine tasks.

Key Term: competence
The ability, based on education, training and experience, to perform professional work to the expected technical standard.

Key Term: due care
The responsibility to act diligently and thoroughly when carrying out professional or audit work.

Maintaining Professional Competence

Accountants and auditors must continually improve their knowledge and awareness of:

• Technical standards (e.g., International Standards on Auditing, International Financial Reporting Standards)
• Changes in relevant law and regulation
• Developments in audit methods and technology

This obligation applies to all roles—whether in practice, commerce, public service, or education. It also applies to trainee and qualified members.

Failing to maintain competence may lead to work of poor quality and expose accountants to disciplinary action or legal liability.

Applying Due Care in Practice

Due care means:

• Planning and supervising work properly
• Checking the accuracy and completeness of work before submission
• Not taking shortcuts that could result in errors or omissions
• Recognising when specialist knowledge is required and seeking expert advice if needed

If accountants accept engagements outside their area of competence, they risk providing substandard work and breaching ethical and legal obligations.

Worked Example 1.1

A small audit firm is asked to advise a client on complex tax matters involving recent international regulations. The most senior staff have not kept up to date with current tax standards.

Question: What should the firm do to comply with the principle of professional competence and due care?

Answer:

• The firm should assess whether it possesses the up-to-date knowledge and skill needed.
• If not, it must either obtain relevant training, consult a suitably qualified expert, or decline the engagement.
• Continuing without relevant knowledge would breach the principle and put both the client and the firm at risk.

Exam Warning

A common exam error is assuming that passing professional exams alone is enough to satisfy competence and due care. You must continue learning and act diligently in all your work. Outdated knowledge or careless work is a breach—even for experienced professionals.

Consequences of Breaching Professional Competence and Due Care

Failing to meet these duties can result in:

• Poor quality audits or advice
• Financial loss to clients or employers
• Disciplinary action by ACCA, including possible removal from the membership register
• Legal consequences if negligence causes loss to others

Auditors may also face questions about their work in court or by regulators, who will expect documented evidence of current competence and appropriate care.

Worked Example 1.2

An audit assistant performs work on a client's new cloud accounting system using methods not reviewed since the system was implemented. Later, errors are detected in the financial statements.

Question: Which principle has been breached, and what could have prevented the error?

Answer:

• The assistant failed to maintain professional competence by not updating their knowledge on cloud systems.
• The audit firm did not exercise due care in planning, reviewing and supervising work in a new technical area.
• Errors could have been prevented by obtaining up-to-date training or consulting an IT specialist.

Summary

Professional competence and due care require continuous upskilling, careful performance, and an awareness of personal limits. This principle protects the public and the profession by ensuring work meets modern technical and ethical standards.

Key Point Checklist

This article has covered the following key knowledge points:

• The meaning and two-part breakdown of professional competence and due care
• The duty to maintain knowledge, skill, and ethical behaviour throughout your career
• How to apply due care by planning and reviewing work thoroughly
• Typical consequences of breaching these duties in audit and financial work
• Practical steps, including recognising when to seek expert help

Key Terms and Concepts

• professional competence and due care
• competence
• due care