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 part time as a finance operations manager at a software company. Your line manager has asked you to investigate getting someone in to consider ways of saving money, so you post on LinkedIn asking for recommendations for consultancies with experience in this area. You receive a message on LinkedIn from Mark, whom you met at a conference last year.
The message reads: “Hi, mate. I heard that the business is going through a rough patch with the pandemic. I’m sure I can find some savings. And I’ll make it worth your while if you pick me — if you can get me a good contract, I might just have a part-time role for you as I grow my business. Let me know your thoughts. Mark”.
It seems too good to be true — you have found a consultant who is keen to do the work, and you have been looking for some extra work to do alongside your part-time role which will help your personal finances.
What should you do?
Ethical issues and guidance
CIMA’s Code of Ethics requires members and students to always act with objectivity. Section R112.1 of the Code states that accountants must not “compromise professional or business judgment because of bias, conflict of interest or undue influence of others”. In this scenario, Mark appears to be offering you a job in return for getting him consultancy work with your employer. This appears to be an attempt to influence your judgement and persuade you to choose him over any other consultants.
Even if you believe that Mark’s offer will not affect your judgement, the Code requires that you should consider what “a reasonable and informed third party would be likely to conclude” (Section R230.8). It is likely that if you asked someone else, they would view the offer of a job as inappropriate.
The Code offers a number of safeguards which you can put in place to reduce or eliminate the threat to your compliance, which are set out in Section 230.11. You could simply refuse the offer, and you may feel most comfortable with this option, given that Mark has indicated he is open to potentially unethical practices in his attempt to get work.
However, there may be other options which would still allow Mark to be considered for the consultancy work. Your organisation should have an official process for selecting consultancy firms; you may wish to speak to colleagues in procurement to understand how this works. There will probably be a formal tender process. Mark’s business may be able to put in a bid for the work this way, and he will be considered alongside other options.
If there is no formal process, you should think about whether you can create one. Mark has made an offer on LinkedIn, but you need a way to assess whether he can actually do the work required.
You should ensure you continue to be alert to your compliance with the Code. If Mark does put in an official bid for the work, you should ensure you remain objective if you are involved further in choosing the consultancy. One safeguard suggested in the Code is to hand over decision-making to someone else who will not be affected by the potential inducement. You may wish to ask someone else to make the final decision on which consultancy gets the work.
You should be cautious about taking on work offered by Mark if he does end up doing any work for your current employer. It is likely your employer will have a requirement that you declare any outside work and potential conflicts of interest. Declaring the work you do for Mark will help protect you and your organisation by ensuring that safeguards are put in place to ensure you remain objective in both roles.
When you respond to Mark, you should politely say that it’s nice to hear from him and, if you decide on this course of action, that you will be in touch with the next steps to enable him to tender for the work alongside others.
If you are sufficiently formal at this stage, it will help Mark to understand that this is a professional engagement and indicate to him how to modify his approach to the opportunity.
— 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.