Ethical conflict and reporting unethical behaviour - Lesson 7 Flashcards
Conflicts of interest between two clients
Objectivity - if accountants advise one client on something where they are in the same market as another client, where they know it will have an adverse effect on the other.
Confidentiality - Info gained from one client could be beneficial for the other.
Points to consider when taking on work for a client in the same market as another client.
1 - First investigate whether there could be a conflict of interest between them
2 - If there is, the accountants must ensure that they have enough staff to deal with each client separately. This would reduce the risk of the conflicts of interest having an adverse effect on the other.
3 - If the firm believes they have enough safeguarding measures in place then they must fully explain the situation to both clients to let them decide if they want to carry on with the service.
4 - If the firm decides they cannot reduce the risks associated with the conflicts of interest then they should decline the work.
Conflict of loyalties for an accountant
An employee should be loyal to both the firm they work for but also the accounting profession. If their employer asks them to do something that conflicts with their ethical values this could be a problem. Because of their responsibility to their employer, they may be put under pressure to not comply with the ethical principles e.g misleading info, break the law, false info.
If an employee is put under pressure by their firm to go against their ethical principles, they can:
Try to persuade the employer to stop the bad practice and solve the problem.
If there is a disagreement between the EE and ER then more senior members of staff should help to resolve it.
After seeking advice from the professional body, if all other options fail they could resign by explaining the reasons to the employer and maintaining the employer’s confidentiality.
Key values in a business’ CODE OF CONDUCT
Being transparent with colleagues, suppliers and customers
Reporting financial information clearly and on time
Being honest and open about when it’s acceptable to accept gifts.
Providing good working conditions for employees
Appropriate use of social media
The Public Interest Disclosure Act 1998
Protects any whistleblowing worker who discloses their concerns in the public interest. If a worker experiences any form of mistreatment from their employer after raising a concern, they have the right to compensation at an employment tribunal. Makes it easier to report an unethical employer.
