As an accountant, you may be faced with some ethical dilemmas in which you have to make difficult decisions or you hardly know what to do. These ethical situations do not always have a clear cut response, and often involves an apparent mental conflict between moral imperatives, in which to obey one would result in transgressing the other.
Ethical issues might vary as professionals accountants are faced with different threats every day. CIMA Code of Ethics identifies five categories of common threats as follows:
- Self-interest threats: commonly called a “conflict of interest”
- Self-review threats: when you are required to reevaluate your own previous judgment
- Familiarities threats: when you become so sympathetic to the interests of others as a result of a close relationship that your professional judgment becomes compromised
- Intimidation threats: when you are deterred from acting objectively by actual or perceived threats
- Advocacy threats: can be a problem when you are promoting a position or opinion to the point that your subsequent objectivity is compromised
Given that you are required to comply with the CIMA professional ethics, what would you do if you face one of the above threats? The following case study will help to demonstrate how it works in practice.
Case study: Takeover information
You are the financial director of a large multinational organisation. You have known confidential information of a takeover bid to acquire a rival company. However, a family friend is also considering selling shares in this rival company and has asked you, as an expert in the industry, for advice on this matter.
What would you do?
The case study puts you in a crossroad. The information is confidential; therefore, you are not allowed to tell anyone, no matter how close the relationship is. However, your family friend trusts you for a piece of advice because of your expertise in this field.
If you keep the information in secret, you will not go against your professional ethics. But you may lose your friend’s trust. On the other hand, in case you share the confidential with your friend, you are compromising yourself and it may sabotage your career.
The decision should be based on the 5 fundamental factors of CIMA Code of Ethics which we have mentioned in our previous post (integrity; objectivity; professional competence and due care; confidentiality; professional behaviour). Download the full case study report to get the full instructions on making the right decision.