ICAI Code of Ethics
The motto of ICAI is Ya esa suptesu jagarti
Ya esa suptesu jagarti kamam kamam Puruso nirmimanah | Tadeva sukram tad brahma tadevamrtamucyate | Tasminlokah sritah sarve tadu natyeti Kascan | etad vai tat |
The meaning of the motto is “ That person who is awake in those that sleep, shaping desire after desire, that, indeed, is the pure. That is Brahman, that, indeed, is called the immortal. In it all the worlds rest and no one ever goes beyond it. This, verily, is that, kamam kamam : desire after desire, really objects of desire. Even dream objects like objects of walking consciousness are due to the Supreme Person. Even dream consciousness is a proof of the existence of the self. No one ever goes beyond it, 'On reaching God all progress ends.' “
The meaning of the motto is “ That person who is awake in those that sleep, shaping desire after desire, that, indeed, is the pure. That is Brahman, that, indeed, is called the immortal. In it all the worlds rest and no one ever goes beyond it. This, verily, is that, kamam kamam : desire after desire, really objects of desire. Even dream objects like objects of walking consciousness are due to the Supreme Person. Even dream consciousness is a proof of the existence of the self. No one ever goes beyond it, 'On reaching God all progress ends.' “
The ICAI Code of Ethics outlines the ethical principles and rules that Chartered Accountants (CAs) in India must adhere to. These principles are designed to ensure integrity, objectivity, professional competence, confidentiality, and professional behavior. The code also includes provisions for dealing with non-compliance with laws and regulations (NOCLAR) and addresses issues like fee dependency and long association with clients.
Preamble
The Code of Ethics is the cornerstone of the accounting profession. It governs the conduct of Chartered Accountants (CAs) and ensures public trust in financial reporting, auditing, and advisory services. This Code applies to all members of ICAI, including those in practice and in service, in India and abroad.
Part A – Fundamental Principles
1. Fundamental Principles
All Chartered Accountants shall comply with the following five fundamental ethical principles:
1.1 Integrity
- Be straightforward and honest in all professional and business relationships.
- Do not associate with information that you believe contains a materially false or misleading statement.
- Be straightforward and honest in all professional and business relationships.
- Do not associate with information that you believe contains a materially false or misleading statement.
1.2 Objectivity
- Avoid bias, conflict of interest or undue influence.
- Do not allow personal relationships or prejudices to override professional judgment.
- Avoid bias, conflict of interest or undue influence.
- Do not allow personal relationships or prejudices to override professional judgment.
1.3 Professional Competence and Due Care
- Maintain professional knowledge and skill to ensure competent service.
- Act diligently in accordance with applicable technical and professional standards.
- Maintain professional knowledge and skill to ensure competent service.
- Act diligently in accordance with applicable technical and professional standards.
1.4 Confidentiality
- Respect the confidentiality of information acquired during the course of work.
- Do not disclose such information without proper authority or unless legally obligated.
- Respect the confidentiality of information acquired during the course of work.
- Do not disclose such information without proper authority or unless legally obligated.
1.5 Professional Behavior
- Comply with relevant laws and regulations.
- Avoid any conduct that discredits the profession.
- Comply with relevant laws and regulations.
- Avoid any conduct that discredits the profession.
Part B – Applicability to Chartered Accountants in Practice
2. Independence
- CAs in practice must be independent in mind and appearance when performing assurance engagements.
- Any financial interest, family relationship, or business connection with the client may impair independence.
- Any financial interest, family relationship, or business connection with the client may impair independence.
3. Prohibition on Advertising & Solicitation
- Direct or indirect solicitation of clients through advertising, personal communication, or any means that affects the dignity of the profession is not allowed.
- Websites, visiting cards, and online platforms must follow ICAI norms.
- Websites, visiting cards, and online platforms must follow ICAI norms.
4. Remuneration and Fees
- Accept only fair and reasonable fees.
- Do not accept contingent fees for audit or assurance services.
- Do not accept contingent fees for audit or assurance services.
5. Appointment and Re-appointment
- Follow provisions of the Companies Act, 2013 and ICAI guidelines.
- A retiring auditor must be informed before a new appointment is accepted.
- A retiring auditor must be informed before a new appointment is accepted.
6. Client Confidentiality
Do not disclose client information to third parties unless:
- With client consent,
- Required by law,
- For peer review or quality control.
- Required by law,
- For peer review or quality control.
Part C – Applicability to Chartered Accountants in Service
7. Responsibilities to Employers
- Maintain integrity and objectivity in the discharge of duties.
- Do not involve in or condone unethical practices like misreporting, fraud, or insider trading.
- Do not involve in or condone unethical practices like misreporting, fraud, or insider trading.
8. Conflict of Interest
- Disclose any potential conflict of interest to the employer.
- Avoid participating in decision-making where impartiality is compromised.
- Avoid participating in decision-making where impartiality is compromised.
9. Whistleblower Obligations
- If aware of unethical or illegal practices, report to appropriate authorities while following company policy and legal protections.
Part D – Threats to Compliance
10. Types of Ethical Threats
- Self-Interest Threat: Financial or other interest could unduly influence judgment.
- Self-Review Threat: Re-evaluating one’s own work.
- Advocacy Threat: Promoting a client’s position.
- Familiarity Threat: Close relationship with client may affect judgment.
- Intimidation Threat: Being deterred from acting objectively due to pressures.
- Self-Review Threat: Re-evaluating one’s own work.
- Advocacy Threat: Promoting a client’s position.
- Familiarity Threat: Close relationship with client may affect judgment.
- Intimidation Threat: Being deterred from acting objectively due to pressures.
11. Safeguards to Eliminate/Reduce Threats
Implement firm-level safeguards such as:
- Internal review and rotation of staff
- Disclosure and consent mechanisms
- External consultation
- Separation of duties
- Disclosure and consent mechanisms
- External consultation
- Separation of duties
Part E – Professional Misconduct (As per Schedule to the CA Act, 1949)
Chartered Accountants shall not:
- Share fees (except with partners or under specific ICAI rules).
- Solicit clients directly or indirectly.
- Accept audit where independence is impaired.
- Fail to disclose conflict of interest.
- Fail to report fraud or non-compliance, if aware.
- Falsify records or statements.
- Be associated with misleading financials.
- Undertake activities incompatible with the dignity of the profession
(e.g. insider trading, lending names for directorships without knowledge).
- Solicit clients directly or indirectly.
- Accept audit where independence is impaired.
- Fail to disclose conflict of interest.
- Fail to report fraud or non-compliance, if aware.
- Falsify records or statements.
- Be associated with misleading financials.
- Undertake activities incompatible with the dignity of the profession
(e.g. insider trading, lending names for directorships without knowledge).
Part F – Professional Misconduct (As per Schedule to the CA Act, 1949)
12. Ethics in Technology and Digital Services
- Maintain transparency when using AI, data analytics, or automated tools.
- Do not manipulate or misrepresent algorithmic outputs.
- Cybersecurity and client data protection are mandatory.
- Do not manipulate or misrepresent algorithmic outputs.
- Cybersecurity and client data protection are mandatory.
13. Ethics in Social Media Use
- Avoid sharing confidential client data or making unprofessional comments.
- Maintain decorum and avoid advertising under the guise of education.
- Maintain decorum and avoid advertising under the guise of education.
Part G – Enforcement, Disciplinary Action & Appeal
- Violations of this Code may lead to disciplinary proceedings by the Disciplinary Committee of ICAI.
- Penalties include: reprimand, suspension, removal from register, fines, and/or prosecution.
- Members have a right to appeal to the Appellate Authority under CA Act, 1949.
- Penalties include: reprimand, suspension, removal from register, fines, and/or prosecution.
- Members have a right to appeal to the Appellate Authority under CA Act, 1949.
Annexure – Updates and Amendments
- This Code shall be reviewed every five years or earlier as required by law or international developments.
- ICAI will notify all changes through official gazette notifications, journals, and member portals.
- ICAI will notify all changes through official gazette notifications, journals, and member portals.