Ethical Dilemmas: Case Studies for Professional Accountants – Part 4 of 4

As previously noted (see Part 1, Part 2 and Part 3), 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 in the Voluntary Sector illustrates how the ethical codes of the CCAB bodies can be applied by professional accountants working in the voluntary (or ‘third’) sector. 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 - Disclosure of malpractice – unauthorised payments;

Case Study 2 - School governor – fair tender policy;

Case Study 3 - Disclosure of malpractice – grant claim;

Case Study 4 - Personal reference;

Case Study 5 - Undisclosed employee benefits;

Case Study 6 - Persuading others to tell the truth.

The guidance states that: “An accountant in the voluntary sector carries a great deal of responsibility, and may be subject to scrutiny by the staff and members of the local community.” It further states that: “A professional accountant working in the voluntary sector has a responsibility to further the legitimate aims of the organisation for which he or she works. The ethical codes of the CCAB bodies do not seek to hinder the fulfilment of that responsibility, but address circumstances in which compliance with the fundamental principles may be compromised. The professional accountant is required to act in the public interest, which requires objectivity to be exercised at all times. On occasions, it may be difficult to reconcile this requirement with the duty to act in the interests of the voluntary sector organisation. Therefore, it is important to understand the conceptual framework approach to resolving ethical dilemmas.”

Ethical Dilemmas: Case Studies for Professional Accountants – Part 3 of 4

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.”

Ethical Dilemmas: Case Studies for Professional Accountants – Part 2 of 4

As previously noted (see Part 1), the Consultative Committee of Accountancy Bodies (CCAB) comprises the ICAEW, ACCA, ICAS and CIPFA in the UK and the Chartered Accountants Ireland. In December 2011, the CCAB published case studies on ethical issues encountered by professional accountants in business, professional accountants in public practice, professional accountants working as non-executive directors and professional accountants working in the voluntary sector. The purpose of these case studies is to provide guidance for resolving ethical problems and to encourage debate in these areas. CCAB welcomes feedback on the case studies and other ethics related issues.

The CCAB guidance on Ethical Dilemmas Case Studies for Professional Accountants in Public Practice illustrates how the ethical codes of the CCAB bodies can be applied by professional accountants working in public practice. 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 - Dealing with staff performance issues;

·       Case Study 2 - Improper accounting for sales;

·       Case Study 3 - Conflicting clients’ interests;

·       Case Study 4 - How much to disclose to the finance director;

·       Case Study 5 - Placing unreasonable expectations on a student;

·       Case Study 6 - Financial interest.

According to the guidance, a professional accountant in public practice “will want to act in the best interests of his or her clients. However, he or she also has a responsibility to act in the public interest, which will require objectivity to be exercised at all times (not only when providing assurances to third parties). The duties of the accountant in public practice who faces an ethical dilemma cannot be easily reconciled. On the one hand, it is good business practice to work closely with your clients; on the other hand, you will sometimes be expected to challenge their decisions, and even distance yourself from them.”

Ethical Dilemmas: Case Studies for Professional Accountants – Part 1 of 4

The Consultative Committee of Accountancy Bodies (CCAB) comprises the ICAEW, ACCA, ICAS and CIPFA in the UK and the Chartered Accountants Ireland. The Board of CCAB Ltd consists of five directors, senior members of the five member bodies. CCAB provides a forum whereby its member bodies can meet and act collectively on behalf of the accountancy profession in the UK to promote the public interest on matters within the sphere of the accountancy profession and its members.

In December 2011, the CCAB published case studies on ethical issues encountered by professional accountants in business, professional accountants in public practice, professional accountants working as non-executive directors and professional accountants working in the voluntary sector. The purpose of these case studies is to provide guidance for resolving ethical problems and to encourage debate in these areas. CCAB welcomes feedback on the case studies and other ethics related issues.

The case studies are compatible with the ethical codes of the CCAB member bodies, which are derived from the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA). They illustrate the application of the “conceptual framework” approach to resolving ethical dilemmas. This approach focuses on safeguarding the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

The CCAB guidance on Ethical Dilemmas Case Studies for Professional Accountants in Business outlines 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 - Pressure to overstate stock valuation;

·       Case Study 2 - Pressure to participate in fraudulent activity;

·       Case Study 3 - Suspicion of false accounting;

·       Case Study 4 - Company restructure – working with limited resources;

·       Case Study 5 - Confidentiality when bidding for a contract; and

·       Case Study 6 - Non-disclosure to auditors.