Essay About Fundamental Principles And Framework Approach

Bluestone Accountants Llp1. Accounting bodies have published a ‘Code of Ethics’, in which they have outlined five ‘Fundamental Principles’ that professional accountants must abide by. The principles are: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. There are threats that could cause the principles to be compromised, which can be prevented through a framework approach of identifying, evaluating threats, and applying safeguards (CIMA, 2014, p.342).

The principle of integrity states “a professional accountant should be straightforward and honest in all professional and business relationships” (ICAEW, 2015). A threat to this principle is familiarity, which was demonstrated when HSBC was discovered to have helped wealthy clients evade tax payments (Moore, 2015). The over familiarity with clients caused personal bias to influence professional judgment, which resulted in the overriding of business procedures to help clients avoid tax. A framework approach is necessary in such situations as it can be applied to various circumstances, and provides a clear guideline as to how to identify and tackle threats to these principles. In this case personal safeguards, such as external third party opinions, can be implemented to guarantee that business decisions are fair and not affected by any unprofessional influences.

Objectivity requires an accountant to not allow bias, conflict of interest or any influence of others to override professional and business decisions (ICAEW, 2015). The compliance with this principle was compromised when Tesco “overstated its half-year profit guidance by £250m” (BBC, 2014) to maintain shareholders’ investments. Using the framework approach it can be identified that personal safeguards would be effective when tackling threats of self-interest, as they ensure that individuals are aware of the role they play within the company. This threat can also be dealt with using safeguards to financial interest, such as monitoring a company’s activity to ensure that procedures are not altered for any undue gain.

Recently, the BBC (2014) reported that Barclays has been fined £38m for putting it’s clients’ assets at risk by failing to keep them separate from their own. This demonstrates the principle of professional competence and due care being breached. The principle requires an accountant to maintain professional knowledge and skill at the level required, and for them to act in accordance with applicable technical and professional standards (ICAEW, 2015). This incident defines the threat of self-review to this principle, as Barclays did not assess themselves to ensure that their services were of the required standard because they were not focused on the rules. They would need to implement business safeguards, such as a compliance manager, to ensure that the company is delivering at the right standards, in accordance with all rules and regulations.

The Barclays case was dismissed by the European Commission in 2016, and the decision was not implemented. The Financial Services Authority (FSAAA) was established in 2010 (FISA) to investigate and punish companies engaged in the fraud of money laundering by financial institutions. The Financial Services Act 2003 and an Act of 2004 provide a framework for conducting investigations to determine that certain actions were taken to achieve compliance and oversight. They mandate the FSAAA to: (1) assess, as required by the financial services industry, whether significant financial, economic or regulatory risk existed, (2) ensure that these risks were proportionate, (3) set out the best response path, (4) provide a list of people with whom to work to ensure that, where possible, there was regular reporting of any misconduct to the authorities, (5) apply for a fair trial and the approval of a judge and have an independent review process, and (6) ensure that investigations of financial institutions are being carried out with the necessary cooperation, (including if there is a judicial or regulatory role) from all members of the regulatory community, especially civil, criminal, commercial and industry bodies that might otherwise have an interest in this type of action. The rules to be observed in these proceedings – the provisions of an independent reviewer, a report by an acting regulator to the FSAAA and the introduction of the Financial Services Authority (FSAAA) – are applicable to financial services institutions and financial services industry participants across the EU (the Regulations). The FSAAA, established in 2010 by the Financial Services Act 2003 and Regulations in 2006, provides for an independent independent authority and regulator of financial institutions within the Financial Services (Financial Industry) Regulation Agency (FRA) to be independent of the Financial Services (Financial Industry) Regulation Authority (FSAA). The FSAA has a specific role in enforcement activities. It is an independent regulatory agency to ensure the safety and security of assets and customers, in the areas concerned. Therefore, it is the responsibility of the FSAA to investigate, prosecute and take legal action against financial institutions to ensure that compliance and oversight progress is being achieved. Further, it is the responsibility of the regulator to ensure the integrity of its own financial reporting laws, that it recognises the risk to the public and respects the rights of regulators.

The decision does not apply to bank deposits. In this case Barclays made no further steps to correct the error which allowed the issue to go ahead or not to have its clients return the bank accounts of their customers. However, Barclays’s actions demonstrate that the FSAA is acting responsibly in carrying out its authority under the Financial Services (Financial Industry) Regulation Agency (FRA) to investigate and prevent financial institutions and financial companies conducting financial transactions. As a result of the mistake, the FRA’s mandate to ensure adequate reporting by firms, as well as the oversight of this oversight process, does not apply.

The FSA is set up by the Financial Services (Financial Industry) Regulation Agency (FRA) in 2006. It has the authority to enforce the FSAA’s existing statutory procedures, such as sanctions, or to impose penalties of up to €10,000 ($25,000) on a criminal offence, subject to paragraph (7)(t)(nii) of the Regulations (Financial Services (Financial Industry).

The FSA uses a system of sanctions for the purpose of determining whether an institution is not subject to compliance (financial-related sanctions