The modern workplace can be an ethical minefield. This monthly column helps you tackle the thorny, but very real, challenges that management accountants face in the workplace.
Written by the CIMA professional standards team and based on realistic situations, the following is a practical guide to using the CIMA Code of Ethics to guide good decision-making.
You’re an accountant in a small finance department at a stationery company. It’s early December, and you come into work one day to find a large gift basket of festive food has been delivered from a consultancy firm, XYZ Consulting, whom you recently worked with on a project to introduce a new piece of accountancy software.
You check with your line manager, Alex, and she confirms that it’s totally fine to accept the gift. A week later, a tender goes out for another consultancy project, this time focusing on redesigning a website. Alex asks you to tell the procurement manager that you would favour XYZ Consulting again, even though you’re concerned they may not have enough experience in this area to do a good job. Alex tells you that the managing director of XYZ Consulting has mentioned that they have a box at a top football team’s stadium that they might be open to inviting you both to if your firm continues to offer business to XYZ Consulting.
What should you do?
Ethical issues and guidance
Gifts and hospitality can be a normal part of doing business, but checks and balances need to be in place to ensure that they do not influence your integrity or the fair business process.
In this scenario, you would be right to question whether XYZ Consulting is attempting to influence your business decisions by offering gifts and hospitality.
The first place to start would be checking whether there are any internal policies relating to gifts and hospitality. Most companies will have a policy that includes a monetary limit on what is considered acceptable and may also have a prohibition against accepting gifts or hospitality during the tender process. Depending on the policy, the gift basket may have been acceptable. However, it is likely the offer of further hospitality should additional business be awarded to XYZ Consulting is unacceptable.
Even if there is no internal policy in place, you are still right to be concerned. The fact that Alex has told you what you should say could be a threat to your integrity and objectivity, both fundamental principles of the CIMA Code of Ethics.
The Code specifies under the principle of integrity that you must be “be straightforward and honest in all professional and business relationships. … Integrity also implies fair dealing and truthfulness”. If you do what Alex has asked and are not truthful about your concerns regarding XYZ Consulting’s experience, you will not be applying the principle of integrity.
Furthermore, under the principle of objectivity, there is “an obligation on all professional accountants not to compromise their professional or business judgment because of bias, conflict of interest or the undue influence of others”.
Section 330 of the 2015 Code of Ethics, and Section 230 of the updated Code of Ethics, which applies from 1 January 2020, deal with gifts and hospitality for members working in business. The need to consider local law and custom is highlighted, as in some jurisdictions the offering of gifts and hospitality in certain situations will be considered bribery.
In some areas of the world, a gift is customary and there is the risk of offending potential partners if you refuse it. Some businesses may seek to exploit these customs, especially if the business is cross-border. It can be difficult to determine whether something is a genuine gift or is intended to influence decision-making.
Here’s where an internal policy comes in handy. Being able to say, “I’m sorry, but our company policy prevents me from accepting this” may save face all round and help you sidestep a potentially embarrassing situation.
You should begin by bringing up your concerns with Alex and make it clear that you will not lie about your impression of XYZ Consulting. You should highlight your concerns about XYZ Consulting, both in terms of their ability to do the new consultancy work and also the fact that they appear to be attempting to influence you through sending gifts and offering hospitality.
You can use any internal policies along with the fact you are bound by the CIMA Code of Ethics to support your arguments. It may be that Alex is also a CIMA member, or a member of another professional body, and raising the fundamental principles may act as a reminder that she also should consider this.
If Alex is unwilling to see your point of view, you may feel it is necessary to escalate further within the organisation. If there is no policy on internal gifts and hospitality, you could suggest that this might be an opportunity to introduce one to avoid any confusion in the future. It’s not necessarily just the policy on gifts and hospitality that can help — it may be that a procurement policy will contain certain requirements of firms wishing to tender for work.
— Bryony Clear Hill is the associate manager–Ethics Awareness for CIMA and is based in the UK. To comment on this article or to suggest an idea for another article, contact Drew Adamek, an FM magazine senior editor, at Andrew.Adamek@aicpa-cima.com.