A:Business Ethics & Ethical Conflict Flashcards
Definition of Ethics
Oxford dictionary ‘moral principles that govern a person’s behaviour’
Morality-difference between what is right and wrong
School of ethics: virtue ethics, Aristotle, Deontological, Kant, Utilitarianism, consequentialists, egoist, utilitarian, pluralists, relativists, absolutists
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?
Business Ethics
Application of ethical principles to the problems typically encountered in a business setting
Public interest
Common well-being which professional accountants must consider
Influences on ethics
The law, regulations, ethical codes, social pressure, corporate culture and personal policies and values
Law vs Ethics?
Law > Ethics
IFAC
International Federation of Accountants
- international body of accounting bodies
- protect public interest by developing HQ standards
IESBA
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
FRC
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
Conduct Committee
- 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
CIMA
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
CIMA code fundamental principles
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
When can you break confidentiality?
Permitted by law and authorise by client
Required by law
Professional duty or right to disclose
Threats to fundamental principles
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
Rules based approach
Compliance based: rules, broken, consequence Instil fear Detection Explicit standards Rules as measure Obedience Mandatory enforceability
Framework based approach
Ethic based Instil idea of right thing to do Prevention Implicit standards Value measured Judgement Discretionary enforcement
Seven principles of public life
By Committee of Standards in Public Life
ALOOHIS
Accountability Leadership Objectivity openness honesty integrity Selflessness
CIMA personal qualities
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
Professional scepticism
Attitude where are you challenge assertions are alert to missstatements and error or fraud
Volkswagen scandal
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
Identifying ethical dilemmas
Societal professional personal and corporate values are a source
Ethical conflict resolution
Check relevant facts Identify ethical issues involved Fundamental principles related to the matter Established internal procedures Alternative courses of action
Business ethics for SMEs
Code of ethics for smaller businesses Business values may include: Customer service Quality Innovation Reliability Efficiency Value for money
Nike issues of child labour low wages and working conditions and environmental damage
Remedies: PR campaign Employment practices Training plan Assessing performance Ethical responsibility
