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CA Ravi Taori

QNO— Principle Based Vs Rules Based New Course – (SM25)
ETH.10 Bhaskar CNO - ETH.020
Briefly outline how principles-based approach differs from rules-based approach to ethics.
Answer Two Approaches:
Ethical guidance may follow principles-based approach or rules-based approach.
1A. Principles-based approach to ethics:
The essence of principles-based approach to ethics is that it requires compliance with spirit of ethics. It
requires accountants to exercise professional judgment in every situation based upon their professional
knowledge, skill and expertise.
1B. Use of professional judgment: It requires that accountants should use professional judgment to evaluate
every situation to arrive at conclusions.
2A. Rules-based approach to ethics: However, rules-based approach to ethics strictly follows clearly
established rules. It may lead to a narrow outlook and spirit of ethics may be overlooked while strictly
adhering to rules.
2B. Rigidity of rules-based approach: Further, rules- based approach is somewhat rigid as it may not be
possible to deal with every practical situation relying upon rules. Therefore, it is necessary that spirit of code
is followed.

QNO— Professional Behaviour Issue - Not Replying to ICAI New Course – (SM25/M24M)
ETH.20 Bhaskar CNO - ETH.040
CA P. Suryakantam has conducted audit of accounts of an entity for a particular year. ICAI has issued a
letter to him relating to certain matters concerning audit. He didn’t even bother to reply to the letter
despite reminders. Discuss which fundamental principle governing professional ethics is disregarded by
him.
Answer Professional Behaviour
• Compliance with Laws and Regulations: It requires an accountant to comply with relevant laws and
regulations and avoid any conduct that the accountant knows or should know might discredit the
profession.
• Avoiding Impairment to Profession: A professional accountant shall not knowingly engage in any
employment, occupation or activity that impairs or might impair the integrity, objectivity or good
reputation of the profession. And as a result, would be incompatible with the fundamental
principles.

Failure to reply to professional body smacks of lack of courtesy and professional responsibility. The principle
of “Professional behaviour” is disregarded

QNO— Integrity Issue - False Information Provided New Course – (SM25)
ETH.40 Bhaskar CNO - ETH.040
A Chartered accountant in practice issued a certificate showing original cost of plant and machinery
installed in premises of a client for Rs. 9 crores to save some regulatory fees for his client. However,
original cost of plant and machinery was Rs.15 crore as per records of client. Which fundamental principle
governing professional ethics is violated in this case?
Answer Integrity

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