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 work as an accountant at a manufacturing company, and one of your responsibilities is to oversee the company’s expenses policy and reporting. It’s December, and lots of people are taking annual leave to spend time with their families.
You get an email from Paul, a manager in HR, telling you that he urgently needs to claim back £1,000 in expenses but his line manager is on leave for two weeks so is unable to approve it. He asks you to approve the expense for him so he can get the money back quickly. He claims he needs the money to pay his rent for the month.
You ask Paul to confirm what the expense is for, and he tells you that it’s confidential and won’t say.
What should you do?
Ethical issues and guidance
Organisations will usually have an expenses policy that requires line manager approval for expense claims, especially for amounts above a certain threshold. This is in place to protect the organisation from potential employee fraud, which could occur if there were no approval process in place to check that claims are legitimate.
You should be wary of the fact that Paul is unwilling to tell you the detail of the expense claim and should be careful not to allow the pressure he has placed upon you to make a quick decision to influence your judgement.
The fundamental principle of objectivity in the CIMA Code of Ethics states that you must not “compromise professional or business judgment because of bias, conflict of interest or undue influence of others”. Section 200.8 A8 of the Code calls out pressure “to deviate from a company policy” as an example of an “undue influence threat” that may threaten your compliance.
In terms of how you might proceed, the expenses policy may include some form of alternative approval if a line manager is unavailable. Expenses policies often state that when a line manager is unavailable, approval can be made by the next person up in the management chain or another manager of a similar level.
If this is not included, you might consider reviewing and amending the policy to include this provision. You could ask Paul to get written confirmation from his line manager’s manager that the expense should be approved. This is likely to get around the issue of confidentiality, as this person is likely to be party to any confidential information in the team.
If Paul is unwilling to get this higher level of approval and continues to pressure you to approve the expense, you should consider the risks of approving the expense yourself. It is possible that Paul is taking advantage of his line manager’s being away to try to push through a false or inflated expense, which would constitute fraud. Even if the expense is legitimate, allowing an approval outside of the policy and without sufficient evidence as to the nature of the expense could set a bad precedent and would open up the organisation to the risk of expense fraud.
It is likely that the best course of action is to refuse to approve the expense without written approval from someone above Paul in his management chain. You may wish to speak to someone else in your team to confirm this position, such as your line manager.
— 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.