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Ethics in action: Confidentiality within the organisation

Ethics in action: Confidentiality within the organisation

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.

The scenario

You work at WeMakeStuff, a large manufacturing company which makes all types of gadgets and widgets for the modern family. As the financial director for the widget division, you have overall responsibility for signing off on contracts with a value above £100,000.

You are approached by the group compliance officer, who tells you that a report has been made via the confidential Speak Up hotline that members of the procurement team have been colluding with suppliers to increase the value of contracts, with both sides taking a cut of the additional profits.

The group compliance officer asks you to help with the investigation by providing a list of all contracts signed in the last year and contracts in the process of negotiation within your division.

However, several contracts are highly confidential, related to a new area of business development. Only you, key members of the finance and procurement teams, and the CEO are aware of the details of these contracts.

You are unsure as to whether you can share the information about these contracts with the group compliance officer.

Can you share the contracts?

Ethical issues and guidance

The key issue here is what information you can and should share with a member of staff to support an internal investigation into possible misconduct and fraud.

Under the fundamental principle of confidentiality in the CIMA Code of Ethics, you have a duty to “maintain confidentiality of information within the firm or employing organisation”. The Code specifies that you may disclose information which would normally be kept confidential when required by law, or to comply with an inquiry or investigation by a professional or regulatory body.

However, this specific example involves an internal investigation. You should consider the risks of disclosure as well as the implications of refusing to disclose the information.

Refusing to disclose the details of these contracts could jeopardise the ability of the compliance team to investigate the reports. Colluding with suppliers could constitute serious fraud, and it is certainly possible that legal action will be taken against the employees should the internal investigation substantiate the claims.

If you refuse to share the information with the group compliance officer or provide an incomplete list by leaving out the confidential contracts, you could create the risk that the alleged fraud may continue, putting the organisation at greater risk of losing money and future legal action being taken.

You should also consider that handing over the information does mean disclosing confidential information to a wider group of employees.

However, the group compliance officer and their team will be well aware of the importance of maintaining confidentiality, given the nature of their roles. You should specify when providing this information that it should be shared with only essential members of staff, explaining that it is commercially sensitive.

You may also wish to alert the CEO that you are sharing this information, although you should consider discussing this with the group compliance officer first to ensure that this would not compromise the investigation if, for example, the CEO is in any way implicated in the wrongdoing.

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.