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Topic list

1. A framework of rules
2. Management accountability
3. The ethical environment
4. Ethics in organisations
5. Accountants and ethics
6. A code of ethics for accountants
7. Ethics in business
8. Ethical dilemmas
9. Resolution of ethical conflicts
1. A framework of rules
Three main sources of rules that regulate behaviour of
individuals and businesses:
The law
Non-legal rules and regulations
1. A framework of rules
Corporate governance concepts:
Openness/ transparency
Probity/ honesty
2. Management accountability
Fiduciary responsibility
Business objectives and management discretion
The stakeholder view of company objectives
The consensus theory of company objectives
3. The ethical environment
Ethics: a set of moral principles to guide behaviour
Ethical principles
The certainty of legal rules does not exist in ethical theory. Different ideas
apply in different cultures
3. The ethical environment
Ethics based on consequences:
Egoism: an act is ethically justified if decision-makers freely
decide to pursue their own short-term desires or their long-
term interests. The subject to all ethical decisions is the self.

Pluralism: different views may exist on morality, but suggests a
consensus may be able to be reached in certain situations.
It emphasises the importance of morality as a social
3. The ethical environment
Ethics based on duty:
Ethical relativism is the view that a wide variety of acceptable
ethical beliefs and practices exist. The ethics that are most
appropriate in a given situation will depend on the conditions
at that time.

Ethical absolutism is the view that there is an unchanging set
of ethical principles that will apply in all situations, at all
times and in all societies.
3. The ethical environment
Rights and virtues:
Individuals have natural inherent rights that should not be
abused led to the development of law to protect certain
human rights.

Virtue ethics continues to exert a subtle influence. The idea
is that if people cultivate virtue, their behaviour is likely to be
inherently ethical. Managers should attempt to incorporate
such virtues as firmness, fairness, objectivity, charity,
forethought, loyalty into daily behavior and decision making.

3. The ethical environment
Social attitudes: such as a belief in the merits of
education, progress through science and technology, and fair
competition, are significant for the management of a business

Ethical problems facing managers:
Grease money
3. The ethical environment
Social responsibility and businesses:
Social responsibility action is likely to have an adverse effect on
shareholders' interests.
Additional costs such as those of environmental monitoring
Reduced revenues as a result of refusing to supply certain customers
Diversion of employee effort away from profitable activities
Diversion of funds into social projects
3. The ethical environment
Specific environmental responsibilities:
Businesses are widely regarded as having a duty to safeguard the natural
environment. There are six areas for action
Environmental auditing
Economic action: charges for environmental damage should be made internally to
give managers an incentive to avoid it.
Accounting action: a separate set of accounts incorporating shadow prices to
represent environmental costs is prepared.
Ecological approach: aspects of the business such as a product or a location are
selected for examination to ascertain their environmental impact.
Production is managed to minimise inputs of materials and energy.
Quality management is applied using the principle of continuous improvement
in environmental performance.
4. Ethics in organisations
Ethics in organisations:
Personal ethics
Professional ethics
Organisation cultures
Organisation systems
4. Ethics in organisations
Leadership practices and ethics:
4. Ethics in organisations
The seven principles of Public life: individuals
employed in the public sector must follow:
4. Ethics in organisations
Two approaches to managing ethics:
Compliance-based approach: ensure that the company acts within the
letter of the law
Integrity-based programmes:
combines a concern for the law with an emphasis on managerial
responsibility for ethical behaviour
Whistleblowing is the disclosure by an employee of illegal, immoral or
illegitimate practices on the part of the organisation
5. Accountants and ethics
As an accountant, your values and attitudes flow through
everything you do professionally.
They contribute to the trust the wider community puts in the
profession and the perception it has of it.
Guidance is usually known as a Code of ethics or Code of
6. A code of ethics for accountants
IFAC and the ACCA:
To enable the development of high standards, IFACs ethics
committee established a code of ethics.
The code indicates a minimum level of conduct that all
accountants must adhere.
As a member of IFAC, ACCA released its own code of ethics,
designed to align to the IFAC code.
6. A code of ethics for accountants
Fundamental principles of the ACCA Code of Ethics and
Professional behaviour
Professional competence and due care
6. A code of ethics for accountants
Personal qualities expected of an accountant:
Personal qualities
Professional qualities
6. A code of ethics for accountants
Personal qualities
6. A code of ethics for accountants
Professional qualities
6. A code of ethics for accountants
Conflicts of interest
Conflict between members' and clients' interests might arise if
members compete directly with a client, or have a joint venture
with a company that is in competition with the client.

Should not accept or continue engagements
Should evaluate the threats arising from a conflict of interest and
unless they are insignificant, they should apply safeguards.
Disclosure (ie informing all known relevant parties of the possible
conflict of interest) is the most important safeguard.
6. A code of ethics for accountants
Threats to independence:
Self-interest threat
Self-review threat
Advocacy threat
Familiarity threat
Intimidation threat
6. A code of ethics for accountants
Self-interest threat:

6. A code of ethics for accountants
Self-review threat:

6. A code of ethics for accountants
Advocacy threat:

6. A code of ethics for accountants
Familiarity threat:

6. A code of ethics for accountants
Intimidation threat:

7. Ethics in business
Three elements to ethics:

Element Explanation
I Ethics concern an individuals professional
responsibility to act
DO Ethics concern the real world practical actions an
individual can take
BEST Ethics concern choices between different courses of
8. Ethical dilemmas
Ethical dilemmas and conflicts of interest:
Ethical dilemmas are situations where two ethical values or requirements
seem to be incompatible. They can also arise where two conflicting
demands or obligations are placed on an individual.
A conflict of interest arises where an individual has a duty to two or more

8. Ethical dilemmas
Ethical dilemmas occur as a result of tensions between 4
sets of values:
Societal values the law
Personal values values and principles held by the individual
Corporate values the values and principles of org where the
individual works, often laid down in ethical codes.
Professional values the values and principles of the professional
body that the individual is a member of, often laid down in ethical

9. Resolution of ethical conflicts
Ethical conflicts may arise from:
Pressure form an overbearing colleague/ family
Members asked to act contrary to technical/ professional
Publication of misleading information
Personal relationship with clients
Gift and hospitality being offered

9. Resolution of ethical conflicts
Individual should ask themselves:

9. Resolution of ethical conflicts
Raising and dealing with ethical dilemmas: