Ch 5 - Code of Ethics Flashcards
Why are ethics important?
Ethics relates to fairness, honesty and responsibility.
What are ethics a set of?
Moral principles to guide behaviour.
What can a code of ethics help you to?
IDENTIFY and DEAL with situations where your professional integrity may be at risk.
What are the 5 fundamental principles that form the basis for the Code of Ethics?
- objectivity
- professional competence and due care
- professional behaviour
- integrity
- confidentiality
What does OBJECTIVITY mean?
Not allowing bias, conflict of interest or the influence other people or override your professional judement.
What does PROFESSIONAL COMPETENCE AND DUE CARE mean?
An ongoing commitment to maintain your level of professional knowledge and skill.
What does PROFESSIONAL BEHAVIOUR mean?
Requires you to comply with relevant laws and regulations. You must also avoid any action that could negatively affect the reputation of the profession.
What does INTEGRITY mean?
Being straightforward, honest and truthful in all professional and business relationships.
What does CONFIDENTIALITY mean?
Respecting the confidential nature of info you acquire - you should not disclose such info unless you have SPECIFIC PERMISSION or a LEGAL or professional duty to do so.
What do you need to do if you find a treat exists?
Take action to remove the treat and reduce it to an acceptable level.
What are the 5 categories of common threat?
- Self-interest threats
- Self-review threats
- Familiarity threats
- Intimidation threats
- Advocacy threats
Explain in more detail, SELF-INTEREST THREATS?
a conflict of interest situation example (if you hold a financial interest in a client)
Explain in more detail, SELF-REVIEW THREATS?
when you are required to RE-EVALUATE your own previous judgement, Example (if you are reporting on a system you were involved in designing or implementing)
Explain in more detail, FAMILIARITY THREATS?
you are so sympathetic to the interests of others due to a close relationship that your professional judgement is compromised.
Explain in more detail, INTIMIDATION THREATS?
When you are deterred from acting OBJECTIVELY by an actual or perceived threat. It could be the threat of dismissal over a disagreement OR a dominant personality attempting to influence the decision making process.
Explain in more detail, ADVOCACY THREATS?
In general, promoting the legitimate goals of your employer does not create an advocacy threat, provided that any statements you make are not MISLEADING!
If you are in a situation where there might be a threat to any of the code’s fundamental principles you should?
ASSESS whether the threat is signification
If a threat is signification what do you do?
TAKE ACTION to remove or mitigate it.
What actions reduce or prevent any ethical issues arising?
SAFEGUARDS - which can be found in employing organisation in the form of whistle blowing or grievance procedures.
What should you do if you think you might be facing an ethical dilemma?
You need to be able to:-
* identify
* explain
* resolve or
* address ethical problems
What do you need to think about if you think something might be unethical?
You need to think about:-
* Relevant facts
* the ethical issues involved
* the fundamental principles of CIMAs code of ethics that apply and
* internal company procedures.
What else will you need to think about regarding a possible ethical issue?
- Identify and weigh up alternative courses of action;
- think about the consequence for those affected;
- What would be the outcome of going down a particular route;
- How would this compare with alternatives?
If you are unsure something is unethically significant, what can you do?
It can help to THINK ABOUT what a reasonably 3rd party might think if they had the facts of the situation.
How would you feel if someone you know discovered how you acted?
Would you feel proud or embarrassed by your actions?
Throughout the process of trying to resolve an ethical dilemma, what is the most important action?
DOCUMENTATION of the steps you took to resolve the issue should you ever need to demonstrate how you dealt with it.
QUESTION - What action would you take with the question about a situation?
- What is firstly ethically wrong here, what fundamental principle can you identify? Try at least 2. Explain THE MAIN ETHICAL ISSUE and a POTENTIAL ISSUE.
If you answer THE MAIN ETHICAL ISSUE IS INTEGRITY, what type of example can you give?
- It would not be appropriate for an accountant to assist someone with a potentially fraudulent act, or
- to ALLOW misleading information to be presented to others.
If you answer THERE IS ALSO A POTENTIAL ISSUE OF OBJECTIVITY, what type of example can you give?
- are you placed under pressure by your superior to not deal with the ethical dilemma, this would mean you have a CONFLICT OF INTEREST between your personal prospects and the requirement to behave with INTEGRITY.
If someone has blatantly asked you to manipulate the outcome of financial statements and threatened you might lose your job what can this be called?
INTIMIDATION
* Firstly raise the concern internally perhaps FD or trusted colleague, if not possible then
* the matter can be raised externally possibly through a whistle-blower scheme.
HOWEVER if neither of these work then you need to take steps to remove yourself from the situation.
