6. Codes of conduct & Organisational Values Flashcards
Accounting bodies base their Code of Ethics on IESBA
In addition to the guidance on professional ethics published by professional bodies many Organisations will have their own Code of Business Ethics
These set out GUIDANCE on the CONDUCT and VALUES that GOVERN decisions and actions within that individual organisation. (Not legally enforcable, no criminal sanctions)
It is designed to help an individual faced with an ethical dilemma to make the right choice of action.
It also ensures consistency in the conduct of all employees within the organisation.
Examples of elements are:
Compliance with the law
Competing fairly
How to act with integrity in all business dealings. Being transparent.
Treating suppliers, partners and customers properly
Treating coworkers respectfully
Contributing to a healthy, safe and secure workplace
Respecting the environment and contributing to the community
Respecting human rights
Maintaining high standards of financial record-keeping and reporting
Institute of Business Ethics (IBE)
Establised in 1986 to encourage high standards of business behaviour based on ethical values.
They raise public awareness and collaborate with other uk & Int’l orgs with interest & expertise in biz ethics.
Produced a
“Simple ethical test for a business decision”
1) TRANSPARENCY - Do I mind others knowing.
2) EFFECT - Who does my decision affect or hurt?
3) FAIRNESS - Would my decision be considered fair by those affected?
“Tone at the Top”
Refers to the ethical atmosphere that is created in the workplace by the organisation’s leadership.
It has a trickle down effect.
Reputational risk
Something that threatens the business good name.
Can result from:
- Direct action of the biz
- Action of one or more employees
- Action of a third party linked to the biz
EG Starbucks tax avoidance
To avoid Orgs must have:
- Good Codes of Conduct
- Strong Governance & leadership
- Transparency in dealings with all parties in & out
- Social responsible (Pay tax!)
- Environmentally conscious
Alongside external regulations Businesses introduce Codes of Practice and Organisational Values to ensure its employees work ethically.
What happens with non-compliance
Non-compliance by an org:
Disciplinary action against accountants
- Internal disciplinary action by employer
- Disciplinary action by professional accounting bodies
(Individual bodies and also by the Financial Reporting Council (FRC) which is the Independent disciplinary body for accountants, accountancy firms and actuaries in the UK.
Misconduct falls in two main categories
- Bringing that accounting profession into disrepute.
- Acting in breach of rules & regs of the accountants professional body. (They will have published disc procdures)
penalties:
1) Be required to give written undertaking not to repeat,
2) Be fined
3) Be reprimanded or severly reprimanded
4) Be declared ineligable for a practice license
5) Have his license with drawn
6) Have his membership suspended
7) Be expelled from the body.
WHISTLEBLOWING
Reporting illegal or unethical behaviour on the part of an employer, colleague or client
Although breaching confidentiality .. Providing a member is acting in good faith they will be protected in many situations by the:
PUBLIC INTEREST DISCLOSURE ACT 1998
(PIDA) “Whistleblower’s charter”
Its a protected disclosure
MONEY LAUNDERING
Max penalty 14 yrs
Failure to disclose suspicion - max 5 years or fine.
Tipping off - max 5 years and/or fine.
Any knowledge or suspicion must be reported to the National Crima Agency (NCA) or the firm’s Money Laundering Reporting Officer (MLRO)
Its a protected disclosure (breach of confidentiality allowed)
CUSTOMER DUE DILIGENCE
Accountants must carry this out before providing services to ensure no legal or ethical reasons they should not enter a professional reltionship. (esp ML)
INAPPROPRIATE CLIENT BEHAVIOUR
Raise with more senior member of staff or contact professional body’s helpline
WHISTLEBLOWING - Internal
- Ensure know all the facts and have evidence
- Follow internal procedures
- Ensure situation fully explained to management incl how org could be affected
WHISTLEBLOWING - External
PIDA protection where he discloses otherwise confidential information which he reasonably believes shows one of the following has or is likely to occur:
- Criminal Offense
- Breach of legal obligation
- Miscarriage of Justice
- Endangerment of individuals H&S
- Environmental damage
Must also be able to show that:
- Acted in good faith
- Reasonably believes disclosed info is true
- Employee would otherwise be visctimused or the evidence be concealed or destroyed if the info was not disclosed.
ML & TF has been dealt with
Other Inappropriate client behaviour:
Other inappropriate must be reported to the appropriate person or authority.
In the case of Fraud or other illegal acts the matter must raised with the police.
If accountant not sure how to proceed raise with senior member of staff or dedicated helpline in a large firm or professional body’s helpline.
.
3 Threats particularly relevant when dealing with clients
1) FAMILIARITY
Eg long term relationship becomes friendly.
Need to safeguard OBJECTIVITY
2) INTIMIDATION
3) ADVOCACY supporting clients position or opinion to the point their OBJECTIVITY may be compromised.
