How is your ethics knowledge? This quiz will put CIMA members’ and candidates’ knowledge of the CIMA Code of Ethics to the test. (See also FM’s “Ethics Quiz for Finance Professionals“, published on Global Ethics Day in October.)
Each of these five realistic scenarios poses a question with multiple-choice answers (correct answers are at the end of the quiz).
Scenario 1
Mai is a sole practitioner who provides accountancy services to small business owners, including filing company accounts and payroll. Mai wants to grow her business and has hired a marketing consultant to develop new marketing material. The consultant has asked Mai to approve a new marketing campaign that describes her business as “dedicated accountants who offer a breadth of experience and a commitment to providing exceptional accounting services”. This is accompanied by an image of a large office filled with a diverse range of office workers sitting at computer desks working. What is the ethical course of action for Mai?
A. Allow the marketing materials to be published, as Mai didn’t expressly lie and the proposed design meets the brief.
B. Allow the marketing material but explain to any potential clients that she is a sole practitioner, only if they ask about the company’s staffing resources.
C. Allow the marketing material, as Mai didn’t design it personally and so isn’t responsible for it.
D. Inform the marketing consultant that the proposed design contains exaggerations that are misleading and ask that they correct the materials.
Scenario 2
Kevin is the manager in the finance department of a tobacco manufacturer with more than 2,000 employees worldwide. His son is currently looking for work after having been made redundant from his most recent job due to his former company’s downsizing to save costs. Kevin’s son has passed all his CIMA CGMA exams and just needs to complete the Practical Experience Requirement before he can apply for full membership. He meets most of the specifications and requirements required to work in the finance department of Kevin’s company. If Kevin were to employ him, which of the fundamental principles and threats to compliance with the CIMA Code of Ethics set out below would be relevant considerations for Kevin?
A. Self-interest threat.
B. Objectivity Principle.
C. Familiarity threat.
D. All of the above.
Scenario 3
Leah is a financial analyst for an international corporation with offices globally. She is tasked with preparing a financial report that will be used for a project in Japan. The corporation wants to grow in East Asia and is looking to expand into Japan. The financial report will be shared with prospective Japanese investors. Leah notices that the budgeting practices and financial reporting standards in Japan differ from those in her home country. She understands the importance of accurate and compliant financial reporting.
What approach should Leah take, as she wishes to act appropriately in terms of her professional competence and due care?
A. Rely on her existing knowledge of financial reporting practices in her home country and complete the report without further research.
B. Prepare the report using a combination of her home country’s and Japanese practices to cover both bases.
C. Research financial reporting standards in Japan and consult with local experts to ensure her report complies with Japan’s standards and regulations.
D. Use a standard template for financial reporting that she has used in previous projects, regardless of the country-specific requirements.
Scenario 4
Sally is a financial consultant for a large asset management company. Sally receives an email from June, whom she has known for many years and is a counterpart at a competitor company. The email contains confidential data regarding the competitor’s investment strategy for the upcoming financial year, which could benefit the company if used strategically. What should Sally do?
A. Destroy the information immediately and inform June of the error.
B. Use the information to develop a strategy that benefits her company since the competitor’s confidential information wasn’t actively solicited.
C. Distribute the information to other departments within the company to ensure maximum strategic advantage.
D. Share the information with her company’s board without disclosing its source.
Scenario 5
Bailey has decided to leave her role as a finance controller for a large accounting firm. She was at the company for four years but decided to leave, as the management treated staff horribly, including underpaying them and speaking to them in a rude manner. The company also has a poor track record of career advancement and so has high staff turnover.
As Bailey sees out her final days at the firm, Mitchell, a friend of Bailey’s, sees the job posting for Bailey’s job. He is in need of a new job and knows Bailey works there. Like Bailey, Mitchell is a CIMA member, and he believes he meets the essential requirements for the role.
The two follow each other’s personal accounts on the popular social media platform “PostieChat”. While conversing in the comments section of a public post about a recent movie trailer that has just been released, Mitchell remembers to ask Bailey about the job role. Mitchell posts a comment asking Bailey what she thinks about the company and whether it is a good place to work. Bailey wants to warn Mitchell about the company, as she knows from firsthand experience that it is not a good environment to work in. How should Bailey respond to maintain professional behaviour?
A. Bailey should respond to Mitchell on “PostieChat” providing him with a straightforward and honest response to his question.
B. Bailey should respond to Mitchell on “PostieChat” and only say positive things about the company. After all, it is still her employer.
C. Bailey should respond to Mitchell in a private chat. As it is a private chat on the “PostieChat” platform, Bailey can be honest and straightforward with Mitchell, telling him all about her bad experiences with the company.
D. Bailey should take the discussion offline. She can provide an honest but measured reply to Mitchell’s questions about the company.
Answers
Scenario 1. Correct answer is D: Inform the marketing consultant that the proposed design contains exaggerations that are misleading and ask that they correct the materials.
The combination of the plural “dedicated accountants” accompanied by an image of an office with lots of employees can give a misleading impression about the level of staff resources. R115.2 of the CIMA Code of Ethics relating to professional behaviour is explicit that when undertaking marketing or promotional activities, a professional accountant shall not bring the profession into disrepute. This includes the accountant being truthful and honest and not making exaggerated claims for the services offered.
Additionally, R111.3 requires that, when a professional accountant becomes aware of having been associated with a materially false or misleading statement, the accountant shall take steps to be disassociated from that information. In this instance, by asking the marketing consultant to revise the design, Mai is guarding against a potential breach of the rules of the Institute.
Scenario 2. Correct answer is D: All of the above.
Attitudes and approaches to employing family members can vary by jurisdiction. In some countries and cultures, it may be a perfectly normal practice. In others, it may be considered unethical and may even carry legal consequences. As Kevin would be employing his son, there may well be a familiarity threat as well as a self-interest threat to compliance with the CIMA Code of Ethics, as Kevin’s judgement may be affected by his personal interest in his son’s success. The Objectivity Principle is engaged for the same reason (120.6 A3 and 220.3 in the CIMA Code of Ethics). As his son is a registered student, Kevin would need to be mindful of this and, as his son would be undertaking his Practical Experience Requirement, Kevin should not be his son’s supervisor.
Scenario 3. Correct answer is C: Research financial reporting standards in Japan and consult with local experts to ensure her report complies with Japan’s standards and regulations.
By researching financial reporting standards in Japan and consulting with local experts, Leah demonstrates professional competence and due care. She would be ensuring that her report is accurate and compliant with the necessary technical standards and regulations within Japan, as required by R113.1(b) of the CIMA Code of Ethics. Further, she would be ensuring that the information provided is fit for purpose and would undoubtedly make it more persuasive to the intended audience. Sometimes, employer organisations operate in differing jurisdictions with differing practising standards. As a CIMA member, it is important to be mindful of this and to not get complacent when it comes to reaching for the highest possible standards of practice.
Scenario 4. Correct answer is A. Destroy the information immediately and inform June of the error.
CIMA members are required by R114.1 to respect the confidentiality of information acquired as a result of professional and business relationships. In this instance, the confidential information is not that of the company for which Sally consults, nor did Sally solicit this information. However, the information received is still of a confidential nature and was received as a result of a professional and business relationship. Furthermore, for the purposes of the fundamental principle of integrity, maintaining integrity does imply fair dealing and truthfulness (CIMA Code of Ethics 111.1 A1). Even if the information was obtained accidentally, using it would be unethical and a breach of the CIMA Code of Ethics. Destroying the information and informing June respects the confidentiality of the competitor’s data.
Scenario 5. Correct answer is D: Bailey should take the discussion offline. She can provide an honest but measured reply to Mitchell’s questions about the company.
R115.1 of the CIMA Code of Ethics requires members to avoid conduct that the accountant knows or should know might discredit the profession. Openly making disparaging comments on a public social media platform about her company has the potential to stray into this territory. Even if Bailey is speaking on her personal social media account, the risk remains that public comments in writing will compromise her professionalism. While she remains at the company, she has an obligation to her employer. Her personal “PostieChat” account may reference her job or career, or she may have referred to her job or career at some point on the platform. In short, it may be possible to associate Bailey’s online behaviour with her profession.
Taking the conversation to a private chat isn’t sufficient, as Mitchell has access to the chat, and so it’s still possible that he could take a screenshot of their conversation and post it online publicly.
That isn’t to say that Bailey can’t be honest with Mitchell about her thoughts on the company. There is no obligation on Bailey to only say good things about her company. However, being a professional comes with certain responsibilities. That includes being mindful of how one communicates, even outside of work. Bailey should consider meeting Mitchell in person where she can be honest about her experiences, while being sure not to breach confidentiality and taking a measured and mindful approach to any criticisms she may have.
Score
If you answered all five scenarios correctly, congratulations.
If you didn’t, CIMA offers a range of support to members and candidates to help them understand the CIMA Code of Ethics. Resources, including videos, thought leadership, blogposts, reports, the AICPA & CIMA social media guidance, 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.