ICAS

Quicklinks

  1. About Us

    Find out about who we are and what we do here at ICAS.

  2. Find a CA

    Search our directory of individual CAs and Member organisations by name, location and professional criteria.

  3. CA Magazine

    View the latest issues of the dedicated magazine for ICAS Chartered Accountants.

  4. Contact Us

    Get in touch with ICAS by phone, email or post, with dedicated contacts for Members, Students and firms.

Login
  • Annual renewal
  • About us
  • Contact us
  • Find a CA
  1. About us
    1. Governance
    2. ICAS Strategy 2030
  2. Members
    1. Become a member
    2. Newly qualified
    3. Manage my membership
    4. Benefits of membership
    5. Career support
    6. Mentoring
    7. CA Wellbeing
    8. More for Members
    9. Area networks
    10. International communities
    11. Get involved
    12. Top Young CAs
    13. Career breaks
    14. ICAS podcast
    15. Newly admitted members 2022
    16. Newly admitted members 2023
  3. CA Students
    1. Student information
    2. Student resources
    3. Learning requirements
    4. Learning updates
    5. Learning blog
    6. Totum Pro | Student discount card
    7. CA Student wellbeing
  4. Become a CA
    1. How to become a CA
    2. Routes to becoming a CA
    3. CA Stories
    4. Find a training agreement
    5. Why become a CA
    6. Qualification information
    7. University exemptions
  5. Employers
    1. Become an Authorised Training Office
    2. Resources for Authorised Training Offices
    3. Professional entry
    4. Apprenticeships
    5. Learning redefined
  6. Find a CA
  7. ICAS events
    1. CA Summit
  8. CA magazine
  9. Insight
    1. Finance + Trust
    2. Technology
    3. Finance + EDI
    4. Finance + Mental Fitness
    5. Finance + Leadership
    6. Finance + Sustainability
  10. Professional resources
    1. Anti-money laundering
    2. Audit and assurance
    3. Brexit
    4. Business and governance
    5. Charities
    6. Coronavirus
    7. Corporate and financial reporting
    8. Cyber security
    9. Ethics
    10. Insolvency
    11. ICAS Research
    12. Pensions
    13. Practice
    14. Public sector
    15. Sustainability
    16. Tax
  11. CPD - professional development
    1. CPD - Everything you need to know
    2. CPD courses and qualifications
    3. CPD news and updates
    4. CPD support and advice
    5. Career support
  12. Regulation
    1. Complaints and sanctions
    2. Regulatory authorisations
    3. Guidance and help sheets
    4. Regulatory monitoring
  13. CA jobs
    1. CA jobs partner: Rutherford Cross
    2. Resources for your job search
    3. Advertise with CA jobs
    4. Hays | A Trusted ICAS CA Jobs Partner
    5. Azets | What's your ambition?
  14. Work at ICAS
    1. Business centres
    2. Meet our team
    3. Benefits
    4. Vacancies
    5. Imagine your career at ICAS
  15. Contact us
    1. Technical and regulation queries
    2. ICAS logo request

Sustainability and the ICAS Code of Ethics: Non-compliance with laws and regulations (NOCLAR)

  • LinkedIn (opens new window)
  • Twitter (opens new window)
By Ann Buttery CA, Head of Ethics, ICAS Policy Leadership

14 November 2022

Main points:

  • ICAS has published ‘Guidance to the ICAS Code of Ethics: Sustainability’.
  • CAs must always ensure their obligations to the five fundamental ethics principles enshrined in the Code of Ethics are met. This guidance seeks to assist CAs by highlighting a number of areas of the Code where provisions could relate to sustainability related matters.
  • This is the fourth of a series of extracts from the guidance. This extract focuses on ‘Non-compliance with laws and regulations’ (NOCLAR).

Ann Buttery, Head of Ethics, ICAS Policy Leadership, highlights the fourth in a series of extracts from ICAS’ new guidance paper ‘Guidance to the ICAS Code of Ethics: Sustainability’ in relation to ‘Non-compliance with laws and regulations’ (NOCLAR).

Sustainability, the CA and The Power of One

Society is changing. There is an ever-growing emphasis on sustainability, and Environmental, Social and Governance (ESG), at government and regulatory level as well as increased societal expectations for organisations to behave responsibly.

Whilst the “E” is clearly important, sustainability is not just about climate change - the importance of societal matters (the “S”) as well as governance and ethical corporate cultures (the “G”) are of equal significance. Organisations need to be thinking about the impact of sustainability/ESG on their organisation and the impact of their organisation on the environment and society.

The accountancy profession has a responsibility to act in the public interest. Ethics is the conscience of organisations, it is at the core of driving behaviours, and is the key to long-term thinking and trust. The golden thread of ethics and The Power of One weaves through sustainability and ESG. There is a need for all CAs to be aware that sustainability/ESG is not a niche topic that they can ignore. Every CA has their part to play in their own sphere of work around ethics and sustainability.

CAs must always ensure their obligations to the five fundamental ethics principles enshrined within the Code of Ethics (the “Code”) are met: integrity; objectivity; professional competence and due care; confidentiality; and professional behaviour. The new guidance to the Code seeks to assist CAs by signposting a number of areas of the Code where provisions could relate to sustainability related matters.

This extract is the fourth of a series from the guidance and highlights how the provisions within the Code in relation to ‘Non-compliance with laws and regulations’ (NOCLAR) could apply to sustainability. Links to the other extracts are provided below.


Non-compliance with laws and regulations (NOCLAR)

In order to address threats to the fundamental ethics principles of integrity and professional behaviour, the ‘Non-compliance with laws and regulations’ (NOCLAR) sections in the Code (Sections 260 and 360) require auditors or other professional accountants in public practice or business, who discover, or suspect, non-compliance with laws and regulations to assess the implications of the matter and take the appropriate action.

As it states at paragraph 260.3 for professional accountants in business in relation to the “employing organisation” (and paragraph 360.3 for professional accountants in public practice in relation to the “client”), the laws and regulations to which the sections apply are:

“(a) Laws and regulations generally recognised to have a direct effect on the determination of material amounts and disclosures in the employing organisation’s financial statements; and

(b) Other laws and regulations that do not have a direct effect on the determination of the amounts and disclosures in the employing organisation’s financial statements, but compliance with which might be fundamental to the operating aspects of the employing organisation’s business, to its ability to continue its business, or to avoid material penalties.”

CAs should be aware that these sections of the Code cover laws and regulations involving sustainability / ESG matters. The Code specifically notes (paragraphs 260.5 A2 and 360.5 A2) examples of laws and regulations which these sections address including: fraud, corruption and bribery; money laundering, terrorist financing and proceeds of crime; securities markets and trading; banking and other financial products and services; data protection; tax and pension liabilities and payments; environmental protection; and public health and safety.

Paragraph 260.5 A3 in relation to an “employing organisation” (and paragraph 360.5 A3 in relation to the “client”) goes on to state:

“Non-compliance might result in fines, litigation or other consequences for the employing organisation, potentially materially affecting its financial statements. Importantly, such non-compliance might have wider public interest implications in terms of potentially substantial harm to investors, creditors, employees or the general public. For the purposes of this section, non-compliance that causes substantial harm is one that results in serious adverse consequences to any of these parties in financial or nonfinancial terms. Examples include the perpetration of a fraud resulting in significant financial losses to investors, and breaches of environmental laws and regulations endangering the health or safety of employees or the public.”

The underlying principle of NOCLAR is the same for all professional accountants i.e. they should respond to an issue and not turn a blind eye. However, NOCLAR has different requirements depending on the particular role and level of seniority of the professional accountant. Four categories of professional accountant are distinguished and specific steps are identified for each.

The classifications are:

Section 260

  • Senior-level professional accountants in business
  • Other professional accountants in business

Section 360

  • Auditors
  • Other professional accountants in public practice

Greater responsibility is placed on auditors and senior-level professional accountants in business. This is highlighted in paragraph 260.11 A1: “Senior professional accountants in business (“senior professional accountants”) are directors, officers or senior employees able to exert significant influence over, and make decisions regarding, the acquisition, deployment and control of the employing organisation’s human, financial, technological, physical and intangible resources. There is a greater expectation for such individuals to take whatever action is appropriate in the public interest to respond to non-compliance or suspected non-compliance than other professional accountants within the employing organisation. This is because of senior professional accountants’ roles, positions and spheres of influence within the employing organisation.”


Find out more

The guidance signposts the following other areas of the Code where provisions could relate to sustainability related matters (please note that these areas are provided by way of example and should not be considered an all-inclusive list):

  • Sustainability and the ICAS Code of Ethics
  • Preparation and presentation of information – integrity and objectivity
    • CAs shall not knowingly be associated with misleading information
    • Internal controls
    • Inquiring mind
    • Reliance on the work of others or on the output of technology
    • Financial interests, compensation and incentives
  • Professional competence and due care, confidentiality and professional behaviour
    • Acting with sufficient expertise
  • Organisational culture, including responsibilities with regard to values of equality, diversity and inclusion
  • Professional appointments
  • Assurance
  • Pressure to breach the fundamental principles
    • Having the strength of character to act appropriately
    • Speak Up? Listen Up? Whistleblow?

ICAS ethics resources

Find out more about the ethics resources ICAS provides to support its Members below.

ICAS ethics resources

ICAS is partnered with whistleblowing charity Protect to provide Members and Students with access to an independent, confidential helpline. This service offers free advice regarding whistleblowing and speaking up.

ICAS Code of Ethics

The ICAS Code of Ethics applies to all members of ICAS, affiliates, students, employees of a member firm or an…

ICAS Ethics Helpline Service

Members with an ethical query can contact us using the following methods.

2023-05-xero 2023-05-xero

Footer links

  • Contact us
  • Terms and conditions
  • Modern slavery statement
  • Privacy notice
  • CA magazine

Connect with ICAS

  • Facebook (opens new window) Facebook Icon
  • Twitter (opens new window) Twitter Icon
  • LinkedIn (opens new window) LinkedIn Icon
  • Instagram (opens new window) Instagram Icon

ICAS is a member of the following bodies

  • Consultative Committee of Accountancy Bodies (opens new window) Consultative Committee of Accountancy Bodies logo
  • Chartered Accountants Worldwide (opens new window) Chartered Accountants Worldwide logo
  • Global Accounting Alliance (opens new window) Global Accounting Alliance
  • International Federation of Accountants (opens new window) IFAC
  • Access Accountancy (opens new window) Access Acountancy

Charities

  • ICAS Foundation (opens new window) ICAS Foundation
  • SCABA (opens new window) scaba

Accreditations

  • ISO 9001 - RGB (opens new window)
© ICAS 2022

The mark and designation “CA” is a registered trade mark of The Institute of Chartered Accountants of Scotland (ICAS), and is available for use in the UK and EU only to members of ICAS. If you are not a member of ICAS, you should not use the “CA” mark and designation in the UK or EU in relation to accountancy, tax or insolvency services. The mark and designation “Chartered Accountant” is a registered trade mark of ICAS, the Institute of Chartered Accountants of England and Wales and Chartered Accountants Ireland. If you are not a member of one of these organisations, you should not use the “Chartered Accountant” mark and designation in the UK or EU in relation to these services. Further restrictions on the use of these marks also apply where you are a member.

Our cookie policy

ICAS.com uses cookies which are essential for our website to work. We would also like to use analytical cookies to help us improve our website and your user experience. Any data collected is anonymised. Please have a look at the further information in our cookie policy and confirm if you are happy for us to use analytical cookies: