Ethical Awareness

NotesQuizCBE

Ethical Considerations

Diagram

An accountancy student should start at an early stage of his career (from time of studying) to apply ethical considerations in his decisions.

The diagram above shows how a student should develop his skills in ethics starting from enhancing the ethics knowledge and moving on to developing ethical sensitivity.

Once these criterions are reached, the student / junior accountant needs to improve ethical judgment and continue to maintain an ongoing commitment to ethical behaviour.

The member bodies of IFAC are professional bodies such as the ACCA, so IFAC has no direct ability to punish an accountant who acts contrary to the code.

However, IFAC expect the transgressor’s professional body to investigate the matter and punish the accountant if necessary.

Usually the discipline process begins with a complaint being lodged with the professional body about the ethical conduct of a member or firm.

Alternatively, the conviction on a legal charge of consequence (example, fraud) may also trigger the discipline process.

The complaint or legal charge is investigated by staff, and a decision is made to lay a charge or not.

Laying a charge necessitates a hearing to determine guilt or innocence, and the hearing process can be quite cumbersome (burdensome).

When a professional accountant is found guilty, the details of the case are made public.

Lynne Paine suggests that ethical decisions are becoming more important and that there are two approaches to the management of ethics in organizations:

  1. Compliance-based approach – designed to ensure that the company acts within the letter of the law, and that violations are prevented, detected and punished.

  2. Integrity-based approach – strive to define companies’ guiding values, aspirations and patterns of thought and conduct.

NotesQuizCBE