Ethics quiz for finance professionals

Take this quiz to test your knowledge of the CIMA Code of Ethics to mark Global Ethics Day on 16 October.
Ethics quiz for finance professionals

How is your ethics knowledge? Are you an ethics intellectual or a bit rusty on the specifics? This quiz, released for this year’s Global Ethics Day, will put members’ and candidates’ knowledge of the CIMA Code of Ethics to the test.

Knowing how to react to an ethical dilemma can be tricky. Each of these five realistic scenarios poses a question with multiple-choice answers (correct answers are at the end of the quiz).

Scenario 1

Catalina is a new finance director who has recently taken over from her predecessor. Catalina believes she has discovered a discrepancy in her company’s financial reporting that suggests a significant overstatement of revenues. The CFO, Stanley, has instructed her to ignore it, stating that the discrepancy is likely an error and, in any case, it would be too costly to correct at this stage. Stanley demands that Catalina sign off on the financial report, stating that he and the CEO will ultimately be responsible, so she should not worry. What should Catalina not do?

A. Ignore the discrepancy as instructed by Stanley.

B. Insist on the report’s being corrected and refuse to sign off on the report until it is corrected.

C. Discuss the issue with colleagues in the finance department to see if they agree with her.

D. Continue to push back against Stanley while documenting her concerns and actions for future reference.

Scenario 2

Jane works for a parent company that owns a chain of hotels around Western Europe. The company is seeking to partner with a new food vendor to supply all of the hotels in the chain. This could be a very lucrative deal for the company that wins the tender. Jane has been assigned to sit on a task group that will evaluate the tenders submitted. Jane realises afterwards that she has a personal relationship with the owner of a company that has submitted a tender. Jane’s friend did not inform her that they would be submitting a tender. Jane is confident that she can be objective in her assessment. How should she approach the situation?

A. Disclose her personal relationship to her supervisor and remove herself from the tender evaluation task group.

B. Continue as part of the task group but keep her personal feelings separate from her professional judgement in order to maintain her objectivity.

C. Ask her friend to withdraw the tender in order to avoid any complications with the process.

D. Withdraw from the task group without disclosing the conflict in order to prevent the task group from being “tainted” by her association.

Scenario 3

Darius is an accounting intern who has been asked to prepare a financial report and has been given a very tight deadline within which to complete it. He is having trouble with some of the calculations and is unclear as to whether the records he has are accurate and up-to-date. He is an intern and has hopes of impressing, so that he can get a permanent position as a junior accountant in the future. He wants to prove to the company that he is able to handle the task without asking for help. What should Darius do next to guard against falling foul of the principle of professional competence and due care?

A. Try his best to complete the report with the information he has available.

B. Request an extension of time so he has more time to complete the report.

C. Look through the accounting records to clarify whether the records are accurate and up-to-date and double-check his calculations to confirm their accuracy. Inform his supervisor if his actions are likely to affect his ability to meet the deadline.

D. Ask a colleague to help him finish the report.

Scenario 4

Monica, a financial controller for a large multinational professional services firm, overhears a conversation about a pending acquisition that has not yet been publicly disclosed. A friend, a market trader, who has heard rumours about the deal, asks her for insider information about the acquisition. He says he can absolutely ensure that no one would know where the information came from and can even offer Monica a portion of any profits. What should Monica do?

A. She can share the details with her friend, as he already seems to know about it from industry rumours.

B. Politely decline to share any details directly, but she can leave her laptop logged in for her friend to read. In this way, Monica hasn’t disclosed anything to her friend “directly”.

C. She can share the details with her friend, as the acquisition will become public knowledge soon.

D. Politely decline to share any details and remind her friend that the information is confidential.

Scenario 5

David is a finance manager for an aerospace engineering company that has offices around the globe. David himself is a resident of New York City but is currently working between company offices in East Asia. David is convicted of assault after an argument with a friend ended in a brief altercation. The two have since reconciled. David, however, still received a suspended sentence and a fine. At what stage must David notify CIMA?

A. Within 14 days of the arrest.

B. Within 30 days of being convicted.

C. Within 14 days of being charged.

D. David does not need to notify CIMA, as the conviction happened while he was overseas from his country of residence.


Answers

Scenario 1. Answer is A: [Do not] Ignore the discrepancy as instructed by Stanley.

R111.2 of the CIMA Code of Ethics states that a professional accountant shall not knowingly be associated with reports, returns, communications, or other information where the accountant believes that the information contains a materially false or misleading statement. In this instance, Catalina believes that the information contained in the reports is incorrect and so she should ensure that she does not put her name to the report. It is useful to discuss concerns with colleagues (while keeping in mind any concerns regarding confidentiality), and it is always useful to document actions and concerns at the time, so that there is evidence for actions taken should it be needed in the future. In this way you can demonstrate that you were not complicit.

Scenario 2. Answer is A: Disclose her personal relationship to her supervisor and recuse herself from the evaluation task group process.

R112.1 of the CIMA Code of Ethics requires an accountant not to compromise professional or business judgement because of bias or conflict of interest or undue influence of others. Bias is clearly a potential issue, and there is a conflict of interest. The fact that Jane believes that she can be impartial isn’t the issue. The nature of the relationship creates a clear conflict. Asking the friend to withdraw would affect the impartiality of the process due to the nature of their relationship, even though it was done in good faith. Withdrawing without disclosing still has the potential to create the perception of impropriety, if the nature of their relationship was later discovered. Being straightforward and honest in all professional and business relationships is also a requirement for CIMA members (R111.1).

Scenario 3. Answer is C: Look through the accounting records to clarify whether the records are accurate and up-to-date and double-check his calculations to confirm their accuracy. Inform his supervisor if his actions are likely to affect his ability to meet the deadline.

R113.1(b) of the CIMA Code of Ethics states that a professional accountant shall act “diligently and in accordance with applicable technical and professional standards”. As Darius is unclear about the accuracy of the records, he should first ensure that he does indeed have the up-to-date records. He’ll then want to ensure his calculations are accurate. Having attempted it, he can then request an extension of time, if needed, and then ask a colleague for help should he need it at that stage. That way, any colleague who assists can understand his initial approach and can give informed guidance or advice.

Scenario 4. Answer is D: Politely decline to share any details and remind her friend that the information is confidential.

R114.1 of the CIMA Code of Ethics requires an accountant to respect the confidentiality of information acquired as a result of professional and business relationships. As Monica obtained this information through the course of her employment, she should not disclose details of the acquisition. Leaving her laptop logged in for her friend to read would still be a breach of confidentiality. The fact that the details of the acquisition will soon become public does not change matters.

Scenario 5. Answer is B: Within 30 days of being convicted.

R115.1 of the CIMA Code of Ethics states that a professional accountant shall not knowingly engage in any business, occupation, or activity that impairs or might impair the integrity, objectivity, or good reputation of the profession. A criminal conviction has the potential to negatively impact the good standing and reputation of accountants and the wider accounting profession. That is why Regulation 19 of CIMA’s Charter, Byelaws and Regulations requires that members and registered students notify CIMA within 30 days of being found guilty by a court or receiving a disciplinary sanction. At the time of arrest and charge, David has not yet been convicted. However, whilst there is no requirement to notify the Institute at the point of arrest or charge, keeping the Institute informed at an early stage assists CIMA’s conduct teams in understanding the progress of the investigation and can help to facilitate the smooth operation of any future action CIMA’s conduct team may need to take.


Score

If you answered all five scenarios correctly, congratulations.

If you didn’t, AICPA & CIMA offer a range of support to members and candidates to help them understand the CIMA Code of Ethics. Resources, including videos, thought leadership, blogposts, reports, and links to other organisations are available on the CIMA Ethics pages of the AICPA & CIMA website along with information about the ethics helpline and inbox.

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.

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