As previously noted (see Part
1 and Part
2), the Consultative Committee of
Accountancy Bodies (CCAB) has published case studies on ethical issues
encountered by professional accountants in business, in public practice,
working as non-executive directors and working in the voluntary sector. These
case studies provide guidance for resolving ethical problems and encourage
debate. CCAB welcomes feedback on the
case studies and other ethics related issues.
The December 2011 CCAB guidance on Ethical Dilemmas Case Studies for
Professional Accountants Working as Non-Executive Directors illustrates
how the ethical codes of the CCAB bodies can be applied by professional
accountants working as non-executive directors. These scenarios are not
intended to cover every possible circumstance, but instead to outline key
principles and processes that could be considered when attempting to identify,
assess and resolve ethical problems in line with the ethical codes.
Six case studies address the following matters:
·
Case Study 1 - To be or not to be a non-executive
director;
·
Case Study 2 - Formal governance procedures not
being followed;
·
Case Study 3 - Confidentiality and conflict of
interest in non-executive roles;
·
Case Study 4 - Non-executive director being used
as a sounding board by an employee;
·
Case Study 5 - Pressure on a non-executive
director to make a decision without adequate information;
·
Case Study 6 - Withholding information from the
non-executive directors.
The guidance states that: “When acting as a non-executive
director in a voluntary capacity, for example for a small charity or school,
your responsibility to behave professionally and demonstrate strong ethics is
in no way lessened by the fact that the position is unpaid.” It further states
that: “Non-executive directors have a broad role that goes beyond operational
matters. They contribute to the development of a clear mission and strategy for
the company and to helping to ensure that the strategic objectives are
fulfilled. Non-executive directors are encouraged to demonstrate their
objectivity and, where appropriate, to challenge decisions of the executive
directors. The duties of non-executive directors cannot be easily reconciled.
On the one hand, they are expected to work closely with the executive directors
as part of a team; on the other hand, they are expected to monitor the
executive directors’ behaviour and to challenge their decisions.”
Furthermore: “It is important to consider the wider
requirements of your role as a non-executive director, whether in the public,
private or charity sector, and to ensure that you comply with all relevant
governance standards and regulations. The role of the non-executive director is
coming under increasing scrutiny in the corporate sector. With this growing
focus can come a greater risk of personal liability should things go wrong.”
