A:Business Ethics & Ethical Conflict

Question 1

Definition of Ethics

Answer 1

Oxford dictionary ‘moral principles that govern a person’s behaviour’

Morality-difference between what is right and wrong

Question 2

School of ethics: virtue ethics, Aristotle, Deontological, Kant, Utilitarianism, consequentialists, egoist, utilitarian, pluralists, relativists, absolutists

Answer 2

Virtue ethics = Aristotle: justice, charity and generosity

Deontological= Kant: duty to central morality

Utilitarianism: happiness of the greatest number

Consequentialists: decision depends on consequences

Egoist: look at your own needs

Utilitarian: greater good

Pluralists: ensuring no ones needs are seriously compromised

Relativists: context

Absolutists: fundamentally correct?

Question 3

Business Ethics

Answer 3

Application of ethical principles to the problems typically encountered in a business setting

Question 4

Public interest

Answer 4

Common well-being which professional accountants must consider

Question 5

Influences on ethics

Answer 5

The law, regulations, ethical codes, social pressure, corporate culture and personal policies and values

Question 6

Law vs Ethics?

Answer 6

Law > Ethics

Question 7

IFAC

Answer 7

International Federation of Accountants

• international body of accounting bodies
• protect public interest by developing HQ standards

Question 8

IESBA

Answer 8

IFAC’s International Ethics Standards Board for Accountants

• independent standard setting board for prof acc worldwide
• develops Code of Ethics for Professional Accountants after fin crisis

Question 9

FRC

Answer 9

Financial Reporting Council

• UK regulator for HQ governance and reporting
• issues UK version of Int Standards on Auditing, taking advice from Audit & Assurance Council
• issues UK version of Int Financial Reporting Standards, taking advice from Accounting Council

Question 10

Conduct Committee

Answer 10

• part of FRC
• provides independent oversight of professional disciplinary issues and regulations of accountant and actuaries in UK /Rep of Ireland
• replaced Professional Oversight Board

Question 11

CIMA

Answer 11

2006: code of Ethics for Prof Accountants launched
2010: revised
2015: American institute of certified accountants collared and added part C

-any body cannot apply standards less stringent than code

Question 12

CIMA code fundamental principles

Answer 12

ICPOP

Integrity: straightforward and honest in all business relationships
Objectivity: no bias, conflict of interest or influence in business
Professional Competence and Due Care: maintainability prof knowledge and skill to ensure competent service
Confidentiality: respect confidentiality and only disclose with authority
Professional Behaviour: comply with relevant laws and regulations to avoid discrediting profession

Question 13

When can you break confidentiality?

Answer 13

Permitted by law and authorise by client
Required by law
Professional duty or right to disclose

Question 14

Threats to fundamental principles

Answer 14

IFASS

Intimidation: deterred by active/perceived threats
Familiarity: judgement compromised due to relationship
Advocacy: promoting position to the point where objectivity is compromised
Self-review: re-evaluating own judgement
Self-interest:your own gain

Question 15

Rules based approach

Answer 15

Compliance based: rules, broken, consequence 
Instil fear 
Detection 
Explicit standards
Rules as measure 
Obedience 
Mandatory enforceability

Question 16

Framework based approach

Answer 16

Ethic based
Instil idea of right thing to do 
Prevention 
Implicit standards 
Value measured
Judgement 
Discretionary enforcement

Question 17

Seven principles of public life

Answer 17

By Committee of Standards in Public Life

ALOOHIS

Accountability
Leadership
Objectivity 
openness 
honesty 
integrity
Selflessness

Question 18

CIMA personal qualities

Answer 18

TCRRR

Timeliness: delivering, punctuality 
Courtesy: good manners
Respect: respect each other
Reliability: trustable and dependable
Responsibility: being accountable for one’s actions and decisions

From ‘Approaches to the development and maintenance of a professional virtues ethics and attitudes in accounting education program’ is published by the IESB

Question 19

Professional scepticism

Answer 19

Attitude where are you challenge assertions are alert to missstatements and error or fraud

Question 20

Volkswagen scandal

Answer 20

In 2015 the German car maker

installing defeat devices to cheat test and reveal that 11 million cars worldwide fitted with the device the scandal

caused anger and force them to pay a $98 billion fine

Question 21

Identifying ethical dilemmas

Answer 21

Societal professional personal and corporate values are a source

Question 22

Ethical conflict resolution

Answer 22

Check relevant facts
Identify ethical issues involved
Fundamental principles related to the matter
Established internal procedures
Alternative courses of action

Question 23

Business ethics for SMEs

Answer 23

Code of ethics for smaller businesses
Business values may include:
Customer service
Quality
Innovation
Reliability
Efficiency
Value for money

Question 24

Nike issues of child labour low wages and working conditions and environmental damage

Answer 24

Remedies:
PR campaign
Employment practices
Training plan
Assessing performance
Ethical responsibility