Principles and Standards of Professional Ethics PDF

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Principles and Standards of Professional Ethics Principles and Standards of Professional EthicsPrinciples and Standards of Professional EthicsPrinciples and Standards of Professional Ethics...

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Overview Principles and Standards of Professional Ethics The IMA (Institute of Management Accountants) provides very specific guidance on principles and standards of professional ethics. We'll study and apply the specifics of IMA Statement of Ethical Professional Practice in this lesson. Upon completion of this lesson, candidates should be able to: Identify and describe the four overarching ethical principles and the four standards (2.F.2.a). Evaluate a given business situation for its ethical implications (2.F.2.b). Identify and describe relevant standards that may have been violated in a given business situation and explain why the specific standards are applicable (2.F.2.c).

Study Guide Principles and Standards of Professional Ethics I.Keep It Personal A.In addition to improving our ethical skills, we need to also stay energized about our personal commitment to ethics. Many professionals find that when presented with difficult decisions that challenge ethics at a very personal level, the personal commitment needed to make the hard decision can be energized by asking oneself the following question: Would the person you most love and admire be proud to watch the decision you're about to make? B. Evidence of your commitment to ethics is tied very closely to your “personal brand.” Organizations spend significant resources to guard and strengthen their brand in the marketplace. As a business professional, you have a personal brand. A single decision, for good or bad, can have an incredible and long-lasting impact on your personal brand. C.Remember that “Perception = Reality.” Not only do you need to make ethically based decisions, but the ethics in your decisions must to be clear to others around you. Like it or not, the perception that others have of you as an ethically-based professional matters very much, despite any argument you might want to make that your ethics are not being perceived correctly. Hence, be sure that the ethics in your decisions and actions are clear for others to see. II.IMA Statement of Ethical Professional Practice—Principles A.The IMA (Institute of Management Accountants) has an important brand, and continually invests significant resources to strengthen that brand across the world. An important element of the IMA brand is represented in explicit principles and standards of professional ethics as described in the IMA Statement of Ethical Professional Practice.1 This statement is available on the IMA website. B. IMA members are expected to fully comply with the IMA Statement of Ethical Professional Practice. The IMA Statement distinguishes between two separate but related views on professional ethics: 1. Overarching principles that express ethical values, and 2. Specific standards that guide ethical conduct. C.The IMA Statement lists four overarching ethical principles to guide member conduct. These principles with specific descriptions follow below. 1. Honesty. IMA members should be honest and truthful in their professional communication and in their professional analysis and work. 2. Fairness. IMA members should be fair and balanced, without favoritism, in their professional work and decisions involving other colleagues and stakeholders. 3. Objectivity. IMA members’ analysis and decision making should be reasoned, thorough, and dispassionate. 4. Responsibility. IMA members are responsible to comply with and uphold the standards of Competence, Confidentiality, Integrity, and Credibility. D.Note that the last IMA guiding principle, Responsibility, is the bridge to the IMA's standards of ethical conduct. III.IMA Statement of Ethical Professional Practice—Standards A.After listing the four overarching principles, the IMA Statement then describes four specific standards of ethical conduct. These standards are crucial as failure to comply may result in disciplinary action by the IMA. Each of these standards is detailed across several specific aspects of the standard. B. The first IMA standard of conduct is Competence. IMA members with ethical competence will demonstrate the following specific characteristics. 1. Maintain an appropriate level of professional leadership and expertise by enhancing knowledge and skills. 2. Perform professional duties in accordance with relevant laws, regulations, and technical standards. 3. Provide decision support information and recommendations that are accurate, clear, concise, and timely. Recognize and help manage risk. C.The second IMA standard of conduct is Confidentiality. IMA members who take an ethical approach to confidentiality will engage in the following processes. 1. Keep information confidential except when disclosure is authorized or legally required. 2. Inform all relevant parties regarding appropriate use of confidential information. Monitor to ensure compliance. 3. Refrain from using confidential information for unethical or illegal advantage. D.The third IMA standard of conduct is Integrity. IMA members who have integrity in their conduct are committed to the following professional practices. 1. Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts of interest. 2. Refrain from engaging in any conduct that would prejudice carrying out duties ethically. 3. Abstain from engaging in or supporting any activity that might discredit the profession. 4. Contribute to a positive ethical culture and place integrity of the profession above personal interests. E. The fourth and final IMA standard of conduct is Credibility. IMA members who are credible in their conduct will be observed to do the following actions. 1. Communicate information fairly and objectively. 2. Provide all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations. 3. Report any delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law. 4. Communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity. F.A careful study of the specifics involved in each IMA standard of professional ethics, and a candid assessment of one's personal practice with respect to these standards, will help finance and accounting professionals better assess specific situations to directly recognize and successfully respond to ethical conflicts.

onstructed. Tracking the costs for direct materials and direct labor is relatively straightforward. Accounting for manufacturing overhead costs, on the other hand, presents a challenge this is not always true. Hence, you've been working on an activity-based costing system to improve the overhead cost assignment process. 10% profit margin. Construction of these low-income housing units will be relatively simple. These smaller buildings are based on a straightforward design used consistently for each hou

At a meeting following the granting of the construction contract by the state, the production supervisor proposes the following idea: Since the state has agreed to pay our costs plus 10%, the higher the costs on the project, the more money we make. What we need to do is funnel as much overhead cost as we reasonably can to this low-income housing project. Now I don't want anyone to think I am proposing something unethical. I am not saying that we should charge the state for fictitious costs. I'm simply proposing that we allocate overhead cost on a per-house basis with each house, regardless of size, being allocated the same amount of overhead. As the cost accountant for the company, it is clear to you (and you believe it is clear to everyone else) that allocating overhead costs as a constant amount per house instead of per direct labor hour will shift a substantial amount of overhead in the organization from the company's core-product homes that are priced competitively in the open market to the government-project homes that are priced based on cost. This approach would be a significant misrepresentation of how overhead costs are actually created in the organization. If this cost assignment proposal goes forward, you will be the one expected to design and deploy the new system. You can see that most in attendance at the meeting are being persuaded by the production supervisor's idea. The IMA Statement of Ethical Professional Practice provides very specific aspects of ethical conduct for each of its four standards of behavior. Carefully consider those aspects in light of this scenario, and indicate for each aspect if it applies to the scenario. More specifically, your determination can be one of three levels: (1) Clearly applies, (2) Maybe applies, and (3) Does Not apply. Answer: (Note that this is a subjective analysis. Be sure that you understand your response in comparison to the suggested solution below.) A.

Competence

Not

1. Maintain an appropriate level of professional leadership and expertise by enhancing knowledge and skills.

Maybe 2. Perform professional duties in accordance with relevant laws, regulations, and technical standards. Clearly

3.

Provide decision support information and recommendations that are accurate, clear, concise, and timely. Recognize and help manage risk.

B.

Confidentiality Not

1.

Keep information confidential except when disclosure is authorized or legally required.

Not

2.

Inform all relevant parties regarding appropriate use of confidential information. Monitor to ensure compliance.

Maybe 3.

C.

Refrain from using confidential information for unethical or illegal advantage.

Integrity Maybe 1. Mitigate actual confilicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts of interest. Clearly 2.

Refrain from engaging in any conduct that would prejudice carrying out duties ethically.

Clearly 3. Abstain from engaging in or supporting any activity that might discredit the profession. Clearly 4.

D.

Contribute to a positive ethical culture and place integrity of the profession above personal interests.

Credibility Clearly 1.

Communicate information fairly and objectively.

Clearly 2. Provide all relevant information that could resonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations. Maybe 3. Report any delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law. Not

4. Communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity.

cifically recognize and successfully address a variety of ethical challenges and conflicts in business. able guidance on principles and standards of ethics that can help IMA members better practice their ethical values as business professionals. IMA principles describe the specific values t ivity, and Responsibility. The IMA Statement then goes on to specifically describe four standards that should guide the ethical conduct of IMA members. These standards are Competenc y considered in addressing all business processes, analyses, and decisions.

Flashcards Principles and Standards of Professional Ethics 1 FC.ps.prof.ethics.FC002_1709 What are the four overarching ethical principles described in the IMA Statement of Ethical Professional Practice?

Honesty Fairness Objectivity Responsibility

2 FC.ps.prof.ethics.FC003_1709 What are the four specific standards of ethical conduct described in the IMA Statement of Ethical Professional Practice?

Competence Confidentiality Integrity Credibility

3 FC.ps.prof.ethics.FC004_1709 MA members uphold the principle of HonestyToasuphold described the in principle the IMAofStatement Honesty, IMA of Ethical members Professional should be Practice. honest and truthful in their professional communication and in their profession

4 FC.ps.prof.ethics.FC005_1709 MA members uphold the principle To of uphold Fairnessthe as described principle ofinFairness, the IMAIMA Statement members of Ethical should Professional be fair and balanced, Practice. without favoritism, in their professional work and decisions involving oth

5 FC.ps.prof.ethics.FC006_1709 A members uphold the principle of Objectivity as describedToinuphold the IMA theStatement principle of of Objectivity, Ethical Professional IMA members’ Practice. analysis and decision-making should be reasoned, thorough, and dispass

6 FC.ps.prof.ethics.FC007_1709 members uphold the principle of Responsibility as described in the IMA Statement of Ethical Professional To uphold the Practice. principle of Responsibility, IMA members are responsible to comply with and uphold the standards of Competence, Confidentiality, Integrity, and Credibility.

7 FC.ps.prof.ethics.FC008_1709

Describe how IMA members uphold the standard of Competence as described in the IMA Statement of Ethical Professional Practice.

Maintain an appropriate level of professional leadership and expertise by enhancing knowledge and skills. Perform professional duties in accordance with relevant laws, regulations, and technical standards. Provide decision support information and recommendations that are accurate, clear, concise, and timely. Recognize and help manage risk.

8 FC.ps.prof.ethics.FC009_1709 members uphold the standard of Confidentiality as described in the IMA Statement of Ethical Professional Practice. Keep information confidential except when disclosure is authorized or legally required. Inform all relevant parties regarding appropriate use of confidential information. Monitor to ensure compliance. Refrain from using confidential information for unethical or illegal advantage. 9 FC.ps.prof.ethics.FC010_1709

Describe how IMA members uphold the standard of Integrity as described in the IMA Statement of Ethical Professional Practice.

Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts of interest. Refrain from engaging in any conduct that would prejudice carrying out duties ethically. Abstain from engaging in or supporting any activity that might discredit the profession. Contribute to a positive ethical culture and place integrity of the profession above personal interests.

10 FC.ps.prof.ethics.FC011_1709

Describe how IMA members uphold the standard of Credibility as described in the IMA Statement of Ethical Professional Practice.

Communicate information fairly and objectively. Provide all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations. Report any delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law. Communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity.

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