How to resolve ethical dilemmas step by stepThe CIMA Ethics Checklist provides steps to help CIMA members resolve ethical dilemmas.
How do you solve an ethical dilemma in the workplace? Work pressures can impact objectivity, which is why an effective process for resolving ethical problems that arise is important. The Ethics Checklist is a tool that can help in these circumstances.
Ethical decision-making involves a methodical process of fact finding and problem-solving. Each step in the checklist addresses factors that are relevant in this process.
Here FM sets out seven steps, which are based on the Ethics Checklist.
1. Check all the facts
You need a diagnosis to propose a cure. And an important first step to diagnose a problem is to ask: "What are the facts?"
Facts are not opinions drawn from inferences. For example, did you hear a rude comment made by a colleague known for crude jokes, or did you witness the reaction of a client, accusing your colleague of unprofessional behaviour in the aftermath of the alleged comment? In short, did you hear them say it, or does it sound like something they would say? All of us are at risk of confirmation bias. A robust fact-finding process can protect against harmful assumptions.
When obtaining the facts, consider the "who", "what", "when", "where", "how", and "why" of it all. Review what the available documentation proves. Check to see if written records correspond with your supposition. Is there contemporaneous documentation to corroborate? If you believe an invoice has been inappropriately processed, check it against previous invoices submitted. Is this a regular vendor? Are the details in the invoice suspicious? Are circumstances as they appear? Be reasonable and proportionate in seeking the facts that inform your next steps.
If your concern is over a singular incident of minimal impact, then you will likely need not spend months looking into the matter. Alternatively, if your concern relates to the disappearance of large sums of money from the balance sheet and you suspect this involves a complex deception, it is unlikely that a quick perusing of financial records will suffice.
2. Is it legal?
The next step is to ask: "Is this legal?" If the issue in question relates to illegal practices such as tax evasion or fraud, then the answer to how you address the problem is very clear. This is why obtaining the facts is so important. If you come across potentially illegal activity, you must not be associated with it and should report it to an appropriate authority.
3. Is it ethical?
To understand the ethical implications of an issue in question, a good starting point is to ask: "Does this feel right?" Another is: "How would you feel if the situation appeared as a story in a newspaper or went viral online?"
With the professional experience you have developed, the chances are that a situation that feels wrong is at least worth a closer look. Consult the CIMA Code of Ethics, which sets out the requirements for professional behaviour expected from professional accountants, and additional CIMA ethics resources. You are not expected to have all the answers.
4. Identify fundamental principles
The Code of Ethics helps you understand any ethical implications of your dilemma. As outlined in Part 1 Section 110, accountants and finance professionals are expected to be straightforward and honest; derive business judgements without bias and conflict of interest; act diligently and with professional knowledge and skill; honour the confidentiality of information acquired in professional and business relationships; and comply with relevant laws and regulations. Identify which of these five fundamental principles — integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour — are relevant to your concerns.
To help you comply with the fundamental principles, the Code of Ethics includes a conceptual framework. This framework offers you an approach to identify threats to the principles and helps you evaluate and address them with the aim of eliminating or reducing them to acceptable levels.
To ensure you adhere to the Code of Ethics, you should review any professional activities, interests, and relationships that might compromise your ability to comply with the fundamental principles. That will help you understand the degree to which your concerns about the issue pose a threat to compliance. Based on this understanding, you can determine whether the level of risk is acceptable, which would mean you are still in compliance with the Code.
If the level of risk is above an acceptable level, you will need to figure out how to reduce the threat to an acceptable level or whether you will need to disengage from the situation. This can be a difficult decision and is why seeking additional support can be worthwhile.
5. Seek advice
If you find yourself dealing with an ethical dilemma that you cannot resolve by following the Code of Ethics or by reviewing the ethics information on CIMA's website, it may be time to seek additional guidance.
Members and registered students can call or email the CIMA ethics helpline and inbox to obtain free and confidential support. CIMA cannot provide legal or technical/accountancy guidance, but having the ability to talk through an issue can provide clarity of thought and stop you going around in circles.
6. Identify courses of action
Deciding what to do based on the facts can be overwhelming, and you may need to take further steps.
If you decide to escalate matters internally to your manager, a senior staff member, or human resources, be mindful of the most effective communication methods. Prepare what to say and how to say it. Consider responses you may receive and prepare to have answers to questions. You may receive pushback or support. Just remember, you are escalating for good reason.
You may need to escalate matters externally. When doing so, you will need to be mindful of factors such as confidentiality and reputational damage to you, the business, and any associated stakeholders. Breach of confidentiality is, or may be, required to report illegal practices to the appropriate authorities or during legal proceedings. If in doubt, get further advice before proceeding, so you can feel confident in your reasons to proceed.
7. Determine whether you need to leave your job
If the threat level is not acceptable, Section R120.10 of the Code of Ethics lays out your options to address the situation. One option is to eliminate the circumstances that create the threat. Another is to apply safeguards, which are actions that reduce a threat to an acceptable level. But, in certain instances, withdrawing may be the only recourse available. This may mean leaving an otherwise rewarding job. That being said, prior to withdrawing, there are some things to consider.
For example, if you are asked to sign off on a report you don't believe is accurate, you can respond by stating your professional standing and why you believe the report is inaccurate, and refuse to sign on that basis. If the issue is one of procedure, you can offer to assist with changing processes so that in the future similar risks are avoided. You cannot improve processes if you leave your job or role.
If disassociating from the situation is only achievable by leaving a job or role, you may wish to obtain legal advice, especially if you are in any way directly implicated by the issue. Your legal advisers can also advise you on whether you can retain evidence on leaving a role to support a referral to the relevant authorities. You are not expected to be an investigator, but you do need to ensure you can demonstrate that you gave appropriate advice at the time to avoid accusations of complicity.
The Code of Ethics allows you to leave a job before your notice period is up if staying may put you at risk of becoming involved in illegal activity. CIMA recognises, however, that it is not always easy to leave without another job to go to. You may prefer to wait until you have found another position. In the meantime, you can document the advice you gave to demonstrate you tried to do the right thing.
It may be that the issue is such that you would need to consider becoming a whistle-blower, and you may require legal advice for that, too.
Anybody you speak to will want to understand what you know and how you came by the information. That's why having the facts, documenting your findings, and understanding the legal and ethical implications is vital. Having this information mapped out in a clear and coherent manner will make having conversations easier.
CIMA resources for difficult ethical issues
Consider the CIMA Code of Ethics.
Visit the CIMAglobal website to access the Ethics Checklist, which can help guide you towards making the right decision.
For further guidance, get in touch via the CIMA ethics helpline and inbox. CIMA staff will be able to direct you towards relevant sections of the Code and available resources and help to consider your next steps.
— Xose Lumor is manager, Advocacy and Professional Ethics–Management Accounting at
AICPA & CIMA, together as the Association of International Certified Professional Accountants. To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.