Lecture 9- Ethical concerns

Ethical behaviour involves choosing [blank_start]actions[blank_end] that are [blank_start]right[blank_end], [blank_start]proper[blank_end], & [blank_start]just[blank_end]. When you work in group in company each member bears some [blank_start]responsibility[blank_end] for [blank_start]well-being[blank_end] of other members. Each member should be willing to [blank_start]sacrifice[blank_end] their own [blank_start]self-interest[blank_end] for [blank_start]well-being[blank_end] of group

Biggest challenge with ethical dilemmas (problems) is that when they arise, [blank_start]employees[blank_end] frequently do not understand that such dilemma has [blank_start]arisen[blank_end] & [blank_start]“correct”[blank_end] action that should be taken to [blank_start]correct[blank_end] dilemma

One ethical principle is [blank_start]integrity[blank_end]. This means to be [blank_start]straightforward[blank_end] & [blank_start]honest[blank_end] in all [blank_start]professional[blank_end] & [blank_start]business[blank_end] relationships

Another ethical principle is [blank_start]objectivity[blank_end]. This means to not allow [blank_start]bias[blank_end], [blank_start]conflict[blank_end] of interest or undue [blank_start]influence[blank_end] of others

Third ethical principle is [blank_start]professional competence[blank_end] & [blank_start]due care[blank_end]. This means to maintain professional [blank_start]knowledge[blank_end] & [blank_start]skill[blank_end] at level required to ensure [blank_start]clients[blank_end] or [blank_start]employers[blank_end] receive competent professional services based on current [blank_start]developments[blank_end] in practice, legislation & techniques & act [blank_start]diligently[blank_end] & in accordance with applicable technical & professional [blank_start]standards[blank_end]

Fourth ethical principle is [blank_start]confidentiality[blank_end]. This means to respect [blank_start]confidentiality[blank_end] of information acquired as a result of [blank_start]professional[blank_end] & [blank_start]business[blank_end] relationships & therefore not [blank_start]disclose[blank_end] any such information to third parties without proper & specific [blank_start]authority[blank_end] unless there is legal or professional right or duty to disclose, nor use information for [blank_start]personal[blank_end] advantage of professional accountant or third parties

Fifth ethical principle is [blank_start]professional behaviour[blank_end]. This means to comply with relevant [blank_start]laws[blank_end] & [blank_start]regulations[blank_end] & avoid any action that [blank_start]discredits[blank_end] profession

One threat to ethical principle is [blank_start]self-interest threat[blank_end]. This means that [blank_start]financial[blank_end] or other [blank_start]interest[blank_end] will inappropriately influence professional accountant’s [blank_start]judgment[blank_end] or [blank_start]behaviour[blank_end]

Another threat to ethical principle is [blank_start]self-review threat[blank_end]. This means that professional accountant will not appropriately [blank_start]evaluate[blank_end] results of [blank_start]previous[blank_end] judgment made or activity or service performed by professional accountant, or by another [blank_start]individual[blank_end] within professional accountant’s firm or employing organisation, on which accountant will [blank_start]rely[blank_end] when forming judgment as part of performing [blank_start]current[blank_end] activity or providing [blank_start]current[blank_end] service

Third threat to ethical principle is [blank_start]advocacy threat[blank_end]. This means that professional accountant will promote [blank_start]client’s[blank_end] or [blank_start]employer’s[blank_end] position to point that professional accountant’s [blank_start]objectivity[blank_end] is [blank_start]compromised[blank_end]

Fourth threat to ethical principle is [blank_start]familiarity threat[blank_end]. This means that due to [blank_start]long[blank_end] or [blank_start]close[blank_end] relationship with [blank_start]client[blank_end] or [blank_start]employer[blank_end], professional accountant will be too sympathetic to their [blank_start]interests[blank_end] or too [blank_start]accepting[blank_end] of their work

Fifth threat to ethical principle is [blank_start]intimidation threat[blank_end]. This means that professional accountant will be [blank_start]deterred[blank_end] from acting [blank_start]objectively[blank_end] because of actual or perceived [blank_start]pressures[blank_end], including attempts to exercise undue [blank_start]influence[blank_end] over professional accountant

Safeguards are [blank_start]actions[blank_end] or other measures that may [blank_start]eliminate[blank_end] threats or reduce them to an [blank_start]acceptable[blank_end] level. They fall into two categories which include: safeguards created by [blank_start]profession[blank_end], [blank_start]legislation[blank_end] or [blank_start]regulation[blank_end] & safeguards in [blank_start]work environment[blank_end]

Two safeguards created by profession, legislation or regulation are: [blank_start]educational[blank_end], [blank_start]training[blank_end] & [blank_start]experience[blank_end] requirements for [blank_start]entry[blank_end] into profession & continuing professional [blank_start]development[blank_end] requirements

Another two safeguards created by profession, legislation or regulation are: [blank_start]corporate governance[blank_end] regulations & [blank_start]professional standards[blank_end]

Final two safeguards created by profession, legislation or regulation are: professional or regulatory [blank_start]monitoring[blank_end] & [blank_start]disciplinary[blank_end] procedures & external [blank_start]review[blank_end] by legally empowered third party of [blank_start]reports[blank_end], returns, communications or [blank_start]information[blank_end] produced by professional accountant

One safeguard in work environment is [blank_start]leadership[blank_end] that stresses importance of [blank_start]compliance[blank_end] with fundamental [blank_start]principles[blank_end], [blank_start]laws[blank_end], [blank_start]rules[blank_end] & [blank_start]regulations[blank_end]

Another safeguard in work environment is documented internal [blank_start]policies[blank_end] & [blank_start]procedures[blank_end] requiring [blank_start]compliance[blank_end] with fundamental [blank_start]principles[blank_end], [blank_start]laws[blank_end], [blank_start]rules[blank_end] & [blank_start]regulations[blank_end]

Third safeguard in work environment is documented [blank_start]policies[blank_end] regarding need to identify [blank_start]ethical threats[blank_end] such as [blank_start]relationships[blank_end] with third parties

Steps in identifying & dealing ethical dilemmas include: Check all facts & [blank_start]document[blank_end] where possible. Then ask ‘is it [blank_start]ethical[blank_end]?' 'Is it [blank_start]legal[blank_end]?' After that [blank_start]identify[blank_end] which fundamental [blank_start]principles[blank_end] are affected & affected [blank_start]parties[blank_end]. Next seek professional or legal [blank_start]advice[blank_end]. Finally, [blank_start]refuse[blank_end] to remain associated with conflict

First few steps for resolution of ethical conflict are: follow your [blank_start]organisation’s[blank_end] established policies on [blank_start]resolution[blank_end] of ethical conflict. If this does not resolve conflict/organisation has no such policy, discuss [blank_start]issue[blank_end] with your immediate [blank_start]supervisor[blank_end] except when supervisor is involved. If your supervisor is involved, present issue to next level (until audit committee/board of directors, if necessary)

Next few steps for resolution of ethical conflict if not resolved are: clarify relevant [blank_start]ethical issues[blank_end] by initiating [blank_start]confidential discussion[blank_end] with an [blank_start]independent[blank_end] or [blank_start]impartial[blank_end] advisor to obtain better [blank_start]understanding[blank_end] of possible courses of action. Seek legal [blank_start]advice[blank_end] as to legal obligations & rights concerning ethical conflict

Final step for resolution of ethical conflict if not resolved is [blank_start]refuse[blank_end] to remain [blank_start]associated[blank_end] with matter creating [blank_start]conflict[blank_end] (could include [blank_start]resignation[blank_end])