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CIMA BA4 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Define ‘Ethics’

A

A set of moral principles and values that guide behaviour

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2
Q

Define ‘Code of Ethics’

A

A set of standards governing the conduct of members of a certain profession

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3
Q

How should an accountant behave?

A

trustworthy - the public relies on them
must consider public interest and social responsibility
key benefit of acting ethically = retaining publics trust

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4
Q

What does CGMA stand for?

A

Chartered Global Management Accountant

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5
Q

What is the CGMA Code of Ethics?

A

As it says on tin
-Emphasises that accountants must act in the public interest
-Based on Code of Ethics for Professional Accountants published by IESBA

Transgressions of the Code - CGMA DO take action, IESBA and IFAC don’t. No legal consequences, but professional/commercial consequences

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6
Q

What is IESBA and IFAC

A

IESBA - International Ethics Standards Board for Accountants
IFAC -International Fedaration of Accountants

IESBA is a part of IFAC, which represents all the major accountancy bodies of the world. IFAC is not itself a membership body

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7
Q

The CGMA code sets out the basic needs of the accountancy profession, what are these?

A

PCPC

Professionalism
Credibility
Provide high quality services
Confidence

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8
Q

What are the Fundamental Principles of the code?

A

CIPOP

Confidentiality
Integrity
Professional behaviour
Objectivity
Professional competence and due care

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9
Q

What are the personal qualities required of an accountant?

A

CTR3

Courtesy
Timeliness
Reliability
Responsibility
Respect

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10
Q

What are the professional qualities required of an accountant?

A

SASI

Skepticism
Accountability
Social responsibility
Independence

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11
Q

What are the two ways to incorporate ethical behavior into organisations?

A

Rules Based/Complience approach

Principle based approach (conceptual framework)

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12
Q

Features of a rules based compliance approach

A
  • Minimum standards must be achieved
  • Punish offenders
  • Supervision -inspections carried out
  • Consistent and east to follow, but potential workarands
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13
Q

Features of a principles based compliance approach

A
  • Law is basis for action
  • Employees encouraged to take responsibility
  • Management create environment to support ethical values
  • Build values into systems
  • Adaptable to diff situations and
  • May lead to inconsistencies and confusion
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14
Q

What type of framework is CGMA?

A

Conceptual framework

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15
Q

Which organizational values promote ethical behaviour?

A

Openness, Honesty, Accountability
Respect Trust
Empowerment Leadership

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16
Q

What is the development cycle?

A

DADARE
Continual profession development is at the heart of CGMA membership

Define -expectations of roles
Assess - capabiliy gap
Design - a programme
Act - qualifications, training etc
Reflect
Evaluate

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17
Q

What is the FRC?

A

Financial Reporting Council
UK’s professional oversight board for accounting

-Regulates specific activities of UK accountancy bodies including CGMA
-Regulation covers: Training, CPD, conduct and discipline

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18
Q

What are the Seven Principles of public life?

A

LISA HOO

Leadership
Integrity - avoid actions that place under oblig
Selflessness -act in public interest not personal
Accountability - responsibility and prepared to be scrutinised
Honesty - declare private interests and resolve conflict
Objectivity - award contracts on merit
Openness - decisions must be freely avail

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19
Q

What is consequentialism?

A

focuess on consequences any action might have. Must understand consequences of actions. Moral = good consequences. Situational and contingent (subject to change).

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20
Q

What is utilitarianism?

A

measures quality of outcome in terms of greatest happiness for greatest number. What is best for majority

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21
Q

What is egoism?

A

What is best for me? Any act is justified if any decision is based on the needs/interests of the individual making the decision

22
Q

What is ethical relativism?

A

There are relative rights and wrongs, nothing is absolute. Some ethically wrong things are less important than others. Can lead to acceptance of ‘anything goes’

23
Q

What is ethical absolutism

A

there are fixed rights and wrongs which are unvarying

24
Q

What is pluralism?

A

several values which may be equally correct and fundamental yet in conflict with each other

25
Q

What are virtue ethics?

A

Applicable to the accountancy profession: The virtues of justice and generosity enable us to act in ways that benefit both the person possessing them and that persons society

26
Q

What is a deontological approach?

A

humans are rational and have a duty to respect other rational beings

27
Q

What are individual benefits of ethical behaviour?

A
  • Better reputation
  • Promotion and jobs and job satisfaction
  • Peace of mind
28
Q

What are Benefits of ethical behaviour for accountancy profession?

A
  • Better reputation, earning prospects, employability
  • Reduces pressure for gov regulation
  • Trust and respect for public
29
Q

What are benefits for society for ethical behaviour

A
  • Confidence in accountants and financial statements
  • Stability in financial markets
  • Protection from crime
  • Success of organisations and society
30
Q

What is an ethical dilemma?

A

a situation where two conflicting obligations are faced
E.g.
Being asked to probe friends who work at competitors
Being asked to disclose confidential info
Issuing reports that misrepresent the facts
Gifts/Bribes
Lacking qualification

31
Q

What is a conflict of interest

A

A situation in which two or more interests, financial or other, exist within one person or organisation and are incompatible.

This threatens objectivity and could adversely influence decision making. It may create an ethical dilemma

32
Q

What is the CGMA codes conceptual framework?

A

A methodology for dealing with ethical dilemmas

33
Q

If accountants realise compliance with one or more of the code’s fundamental principles is jeapordised, what should they do?

A
  • Identify the principles in danger
  • Identify the nature of the threat to the principles
  • Identify safeguards to reduce threat/elimate
34
Q

What are threats to compliance with fundamental principles?

A
  • Self interest: shares in company you’re auditing
  • Self review: preparing and auditing financial statements
  • Advocacy: remaining with a supplier company because you introduced the company
  • Familiarity: appointing a family member as a manager (nep)
  • Intimidation: threat of loss of job
35
Q

What safeguards are there to the fundamental principles?

A
  • Education, training and experience requirement for entry to CGMA
  • CPD requirements
  • Corp governenance requirements
  • Statutory or common law rules
  • Professional standards
  • Professional monitoring and disciplinary procedures
  • 3rd party review
  • Whistleblow procedures
  • Disciplinary procedures
36
Q

What is the CGMA Ethics checklist?

A

A checklist to follow if you have an ethical dilemma or conflict of interest

37
Q

List the CGMA Ethics checklist

A
  1. Check all facts and document
  2. Is it ethical
  3. Is it legal
  4. Identify fundamental principles affected
  5. Identify affected parties
  6. Possible course of action
    7.Seek advice
  7. Refuse to remain associated with the conflict
38
Q

Process for resolving ethical conflict

A

1) Try to resolve yourself

consider
-fundamental principles
facts and ethical issues involved
alternative courses of action and consequences

2) select appropriate course of action
3) keep a record of all correspondence
4) consult with appropriate people in organization

5) obtain professional advice from professional body
6) obtain legal advice
6) Change role or department
7) resign if all else fails

If dilemma encompases breaches of law consider whistleblow

39
Q

List all important acronyms

A

Basic needs of accountancy profession: PCPC
Fundamental principles of the code: CIPOP
Personal qualities required of an accountant: CTR3
Professional qualities required of an accountant: SASI
CPD cycle: DADARE
Seven principles of public life LISA HOO

40
Q

FP: Confidentiality

A

Respect confidential information and do not disclose to third parties unless a legal/professional right or duty to disclose

41
Q

FP: Integrity

A

Straightforward and honest

42
Q

FP: Professional Behaviour

A

Comply with laws and regs

43
Q

FP: Objectivity

A

no bias, conflict of interest, undue interest of others

44
Q

FP: Professional competance and due care

A

maintain knowledge and skill

45
Q

When can confidentiality be broken?

A

Obligatory responsibility – suspect money laundering, drug trafficking or terrorist offences
Voluntary disclosure – Public interest (fraud)

46
Q

Prof qual: Sceptism

A

Question info supplied to them

47
Q

Prof qual: Accountability

A

accountable for own actions - open to scrutiny

48
Q

Prof qual: social responsibility

A

aware work may affect public

49
Q

Prof qual: independence

A

produce work free from bias and prejudice

50
Q
A

CIMA BA4 (1 decks)

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