10. Professional ethics in accounting and business

Question 1

what are ethics?

what are they measured by? (4)

Answer 1

ethics are a system of moral principles that examine the principles of right and wrong.

they are measured by….

• consequences
• motivation
• principles
• values

Question 2

what is consequentialism?

what are the two ideologies within it?

Answer 2

argues that the result determines whether an action is ethical.

egoism: ethical if beneficial to the individual
utilitarianism: ethical if beneficial to the mass

Question 3

what is the pluralist approach?

Answer 3

catering to the needs of all stakeholders without seriously compromising the interests of any one group.

Question 4

what is the difference between relativism and absolutism?

what other ideology is absolutism linked to?

Answer 4

relativism: no universal moral code; dependent on circumstance.
absolutism: certain actions are inherently right or wrong..
linked to deontological ethics: Immanuel Kant.

Question 5

why are business ethics important for the organisation? (4)

Answer 5

• investors are reassured
• employees are motivated
• appearance
• driver of profitability

Question 6

why are business ethics important to the individual? (3)

Answer 6

• consumer expectations risen
• ethical preferences in consumers
• employees respond well to ethical businesses

Question 7

how do you characterise a profession? (5)

Answer 7

• mastering of skills
• governance by a professional organisation
• process of certification
• acting in the public interest
• compliance with an ethical code

Question 8

what are the main principles of the IFAC Code of Ethics for Professional Accountants? (5)

explain them. who also took these principles?

Answer 8

• integrity: being truthful; no association with dishonesty.
• objectivity: judgement not compromised
• professional competence and due care: necessary professional knowledge
• confidentiality: information not to be disclosed.
• professional behaviour: comply with relevant laws and legislations

principles also adopted by ACCA Code of Ethics and Conduct

Question 9

when acting out of line with the ACCA Code of Ethics and Conduct, who may you be called upon?

Answer 9

the ACCA Disciplinary Committee

Question 10

what is public interest?

Answer 10

the common well being/welfare of society,

Question 11

what is the difference between a corporate ethics statement and a corporate ethics code?

Answer 11

corporate ethics statement consists of broad generalisations; a corporate ethics code is much more specific.

Question 12

who will many large firms appoint to monitor corporate codes of ethics? list both names

Answer 12

an ethics officer / a compliance officer

Question 13

what are the main ethical threats an accountant faces? (5)
also, which components of the ACCA Code of Ethics and Conduct / IFAC Code of Ethics for Professional Accountants do they threaten?

Answer 13

• self-interest threat: financial interests/conflicts.
  threatens integrity.
• self-review threat: evaluating their own decisions threatens objectivity.
• advocacy: threatens objectivity.
• familiarity: sympathy due to personal relationship.
  threatens integrity/objectivity.
• intimidation: threats
  threatens integrity/professional behaviour

Question 14

what safeguarding measures have been implemented by the ACCA to act against these ethical threats? (4)

Answer 14

• ethics training
• corporate governance requirements
• monitoring and disciplinary procedures
• professional standards

Question 15

how should businesses safeguard against ethical threats? HOTTER

Answer 15

Honesty

Openness

Transparency

Trust

Empowerment

Respect

Question 16

what should an accountant do if they uncover illegal or unethical behaviour? (3)

Answer 16

• consult with whom is responsible for ethics internally i.e. the compliance officer
• if the problem remains unresolved, they should inform the ACCA (the relevant professional body).
• if the problem is still unresolved, report to relevant authorities (if needed) and withdraw from engagement.