7. Osborne - Ethical conflict and reporting unethical behaviour Flashcards
Ethical Conflict and Resorting Unethical Behaviour (CH7)
What are the 2 ways a conflict of interest may arise?
- Accountant’s own self interest
- Interest of accountant’s clients conflicting
• e.g. Two or more clients been in the same market competing
Ethical Conflict and Resorting Unethical Behaviour (CH7)
If a safeguard cannot reduce a threat to the fundamental ethical principles to an acceptable level, what should be done?
The accountant should not accept or continue the assignment.
Ethical Conflict and Resorting Unethical Behaviour (CH7)
Define Loyalty
Loyalty means - being firm and not changing in your support for a person or an organisation, or in your belief in your principles.
Ethical Conflict and Resorting Unethical Behaviour (CH7)
What is the process an accountant should follow when trying to resolve an Ethical Conflict?
- Consider the relevant facts relating to the conflict.
- Assess all the ethical issues involved.
- The fundamental principles that are involved by the ethical conflict.
- Whether there are established internal procedures to deal with the conflict and if so how they can be applied to the situation.
- What alternative courses of action are available to the accountant.
- Seek advice from others (i.e. professional body or legal advice)
Ethical Conflict and Resorting Unethical Behaviour (CH7)
What are the ethical organisational values that should be included in a business’ code of practice?
- Being transparent with colleagues, customers and suppliers
- Reporting financial and regulatory information clearly and on time
- Identifying when it is appropriate to accept and give gifts and hospitality.
- Paying suppliers a fair price and on time.
- Providing fair treatment, decent wages and good working conditions for employees.
- Not using / responsibly using social media.
Ethical Conflict and Resorting Unethical Behaviour (CH7)
What is the common internal disciplinary procedure?
- A verbal warning
- A written warning
- A disciplinary hearing
- The opportunity to appeal
- Suspension from work
- Dismissal
Ethical Conflict and Resorting Unethical Behaviour (CH7)
Which Professional bodies can take Disciplinary action for misconduct?
- Individual accounting bodies
-
Financial Reporting Council (FRC)
(the independent disciplinary body for accountants).
Ethical Conflict and Resorting Unethical Behaviour (CH7)
What are the 2 main categories of Misconduct?
A. Bringing the accounting profession into disrepute.
B. Acting in breach of the rules and regulations of the accountant’s professional body.
Ethical Conflict and Resorting Unethical Behaviour (CH7)
What is a Whistleblower?
A whistleblower can be defined as: a person who tells someone in authority about misconduct, alleged dishonesty or illegal activity that has or may occur in an organisation.
Ethical Conflict and Resorting Unethical Behaviour (CH7)
What important points must an Internal Whistleblower consider beforehand?
- Ensure that he/she knows all the facts surrounding the issue and has evidence to support the facts.
- Follow the employer’s internal procedures for reporting.
- Ensure that the situation is fully explained to management.
Ethical Conflict and Resorting Unethical Behaviour (CH7)
How are External Whistleblowers protected?
Providing a member is acting in good faith when they ‘blow the whistle’ on an employer and so break the duty of confidentiality, he/she will be protected in many situations by the Public Interest Disclosure Act 1998.
Ethical Conflict and Resorting Unethical Behaviour (CH7)
Define Liability
Liability means having legal responsibility for something with the possibility of having to pay damages.
Ethical Conflict and Resorting Unethical Behaviour (CH7)
What is Professional Negligence?
When a client suffers a loss due to the fault of the accountant.
Ethical Conflict and Resorting Unethical Behaviour (CH7)
What is Professional Indemnity Insurance?
Professional Indemnity Insurance - insurance that an accountant takes out to cover any damages they may have to pay a client due to professional negligence (breach in accountant’s duty of care).
