In part one of this series, Bob Souster focused on the meaning and significance of ethics to businesses and people at work. In the second part Bob takes a closer look at ethical principles.

    Ethical principles

    Led by international bodies such as the International Federation of Accountants (Ifac) and the Chartered Banker Institute, several principles have been identified as being of crucial importance to the professions:

    1. Integrity
    2. Objectivity
    3. Professional competence and due care
    4. Confidentiality
    5. Professional behaviour

    It’s not adequate to simply identify and articulate the above principles. In order to put them into practice, organisations must adopt values that will promote adherence to the principles, thereby maintaining the confidence of stakeholders. Accountants have to recognise that their duties are not limited to what clients expect of them, and must accept that they have a fiduciary duty, or duty of absolute trust, to a wide range of stakeholders.

    Table 1 sets out additional values that should be adopted.

    Table 1 Organisational values
    Value Meaning
    Openness Being full and complete in the provision and disclosure of information and reasoning behind decisions.
    Trust Relying on the judgments and information provided by other professionals, and embracing values that encourage others to rely on our judgements.
    Honesty Not only telling the truth, but being prepared to give complete information on which others can fully depend.
    Respect Treating others with dignity and adopting a professional manner.
    Empowerment Ensuring that those who are entrusted with responsibilities have the authority to carry out the tasks necessary to fulfil their duties.
    Accountability Taking full responsibility for the outcomes of our work, including work carried out on our behalf by others.

    Corporate codes of ethics

    Corporate codes of ethics are published by private sector organisations in order to communicate their values and beliefs to stakeholders. These include:

    • Customers, whose buying decisions may be influenced by ethical considerations
    • Shareholders, whose investment decisions may be influenced by ethical factors
    • Employees, who have to know the standards expected of them
    • Suppliers, who need to understand the expectations of their customers and also that they will be treated ethically during the course of the commercial relationship
    • Lobby groups, who may have specific interests in certain practices of the organisation
    • The community in which the organisation is situated, who may seek reassurance that the organisation will act in its interest as an employer and as a good ‘corporate citizen’.

    The contents of a typical code of ethics are set out in table 2.

    Table 2 Contents of a code of ethics
    Commitment Content
    Core principles These should refer not only to its commercial objectives but the manner in which they will be pursued. For example, they may state social and environmental commitments as well as best practices that will be adopted.
    Financing How share and loan capital will be raised. This must also allude to how the organisation will deal with providers of share and loan capital, confirming that its published statements will be honest.
    Customers Customers may refer to the statement in order to confirm the minimum standards that can be expected from their purchases, especially in terms of benefits to be derived from the products and services. They may also be interested in matters such as customer service and distribution channels, supply chain policies (such as ‘Fairtrade’ commitments, organic ingredients and so on) and animal testing.
    Suppliers The code may refer to how suppliers will be chosen and the standards to which they must adhere. It may also set down the terms of business on which suppliers are engaged.
    Employees The code should confirm employment practices in relation to engagement of workers, including equal opportunities and diversity, working conditions and how employees will be developed.
    Community Organisations bring value to the community by providing employment and generating income, but may also have adverse effects through traffic congestion, emissions and even unemployment if the company decides to downsize or relocate. The code may provide assurances in respect of such factors.
    Lobby groups Lobby groups express specific concerns relating to factors such as raw materials, working conditions and environmental impact. The code may address such issues by stating broad policies.
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