Code Of Ethics Flashcards
What are the codes of ethics?
Ethics describe how an entity does it’s business not what it does. relate to fairness, honesty and responsibility; refers to: Conduct Integrity Good standing Reputation Discredit
Good ethical behaviour exceeds legal requirement
Why is business ethics important?
Businesses are part of society.
Society expects its individuals to behave properly, and similarly expects companies to operate to certain standards
Why are business ethics important for the organisation?
Driver for profitability
Ethical framework is a part of good CG and suggest a well run business
Investors are reassured by the approach to risk management
Employees are motivated if there operating environment has a good ethical corporate behaviour
Why are business ethics important for the individual?
Consumers and employees have expectations that are evolving
Consumers may choose to purchase ethical items like fair-trade even if they are not the cheapest
Employees will not accept orders to act in a manner that they believe to be unethical
Why do accountants have a code of conduct?
Accountants should perform their work properly. Poor work may result in: Disciplinary action by CIMA eg. Business losses Poor brand reputation
What are the 5 fundamental principals of CIMA’s code of ethics?
Integrity Objectivity Professional competence and due care Confidentiality Professional behaviour
What is integrity?
Straightforward
Honest
Truthful
Information you represent should not be materially incorrect, misleading (either by inclusion, omission, or obscurity)
What is objectivity?
Free from:
Bias
Conflict of interest
Influence of others over professional judgement (e.g. asked to state figures not in line with professional requirements)
Consider conflicts of interest with regard to relationships where professional judgement could be compromised
What is professional compitance and due care?
Commitment to maintain knowledge and skills (legislative, practice, technique)
Maintain knowledge of others within your authority
Careful, thorough, diligent work referring to appropriate standards
What is confidentiality?
Information you acquire from past, present and future professional relationships
Disclose only where permission, or legal or professional duty e.g. whistleblowing duties under Anti-money laundering legislation
Information never to be used for your or another person’s advantage e.g. insider trading, fraud investigations, insolvency issues
What is professional behaviour?
Comply with relevant laws and regulations.
Avoid action that could negatively impact on your professional reputation.
What are the threats to CIMA’s fundamental principals?
Self-review –re-evaluation of previous judgement Previous business decisions / Other business transactions you were involved in.
Familiarity – influenced to be sympathetic /empathetic
Intimidation –Deterred from acting objectively as a result of actual or perceived threats/ subordinate position / bullying
Advocacy –promoting a position or opinion to the point that your subsequent objectivity is compromised /for a third party
What are safeguards?
Occurs when code of ethics is threatened.
Safeguards – Employer / Legislative/Professional standards / Individual
What is ethical dilemma resolution?
Gather all relevant information to determine is there really an ethical dilemma to be addressed
Raise concerns internally (manager, colleague, internal grievance procedure/whistleblowing)
Raise concerns with client (unless money laundering concerns then follow guidelines)
Consider reporting externally (e.g. company auditors, regulatory authority) taking note of confidentiality issues
Consider removing self from situation
