ethical conflict and reporting unethical behaviour Flashcards
(44 cards)
How can a conflict of interests occur for the accountant’s clients ? P143
- public practice work =Several different clients
- chance- conflict- two or more clients
- same market- same customer - success of 1 = failure for others
What fundamental principles are affected by an accountant working for clients with conflicting interests ? P143
- Objectivity
- Confidentiality
What are the two potential problems facing an accountant working for a client with conflicting interests ? P143
- Advice to one - adverse affect on other (objectivity)
- information gained on one - beneficial to other client (confidentiality)
How can the risks associated with working for clients with conflicting interests be reduced ? P143
- safeguarding:
- Compartmentalising - reponsibiltiy and knowledge each client - use different staff each assignement
- no safeguards = not accept/ continue - one / more appointments
What should an accountant do before taking on a new client/ there are changes in circumstances of existing client ? P143
- Reasonable steps - conflict interests exists / could arise
- client fully informed - if conflict
- client decision - use of accountant
What is a definition of loyalty ? P144
- Firm / not changing
- support - person
- support organisation
- belief in your principle
What are examples of an employer pressuring an accountant not to comply with their fundamental principles ? P145
- Law break
- rulees and standards break - profession
- part - unethical / illegal earnings plan
- lie/mislead (silence) - auditors/ regulators
- name/association - misrepresenting statements
What options does the accountant have if the employer puts pressure on them to break their fundamental principle or the law ? P145
- employer broken law - persuade employer not to
- difference of opinion - accounting / ethical matter - senior staff / employer’s dispute resolution
- resign - remain confidential
What should an accountant do before offering their resignation for non compilance with employer demands to break fundamental ethical principles ? P146
- Advice - professional body/ legal
- now legal protection against dismissal - whistleblowing
How should an accountant go about solving an ethical conflict when applying their fundamental principles ? P148
- formal conflict resolution process
- solve informally
What factors should an accountant consider when attempting to resolve the ethical conflict, which arises when trying to apply fundamental ethical principles ? P148
- facts relating to conflict
- ethical issues involved
- fundamental principles involved
- established internal procedures
- alternative course of actrion available
- advice from others
What if the accountant cannot resolve the ethical issue, when applying fundamental principles, by themselves ? P148
- Consult other appropriate colleagues
- line manager raising - discreet & confidential
What should the accountant do if they are still unable to resolve the ethical dilemma through consulting an colleague? p148
- seek further advice
- larger organisation - employer’s ethics helpline
- smaller organisation - not own helpline - professional accounting body contact E.G. aat confiedential ethics helpline
Who should the accountant report to if the conflict is between the accountant and another member of staff/ organisation that they work for ? P148
- Person charged with governance management - directors / audit committee
What must the accountant always remember throughout dealing with ethical dilemmas? P149
- Document - ethical issue detail and discussions
What advice can the professional accoutant get if the ethical issue has not ben resolved ? P150
- professional advice - professional accounting body
- Legal advice
- on confidential basis
What if the accountant is still unable to resolve the issue after reporting it to a professional accounting body ? P150
- Disassociate from issue
- withdrawing from engagement team - working on assignment
- resigining - engagement/ firm / employer
How do organisations comply with relevant laws and regulations ? P150
- Own code of conduct
- business code of practice / conduct - organisational values included
What are the key organisational values that should be included in a business’ code of conduct ? P150
- transparency - colleagues, customers, suppliers
- reporting info clearly & on time - financial and regulatory
- open and honest - appropraite to accept gifts and hospitality
- supplier fair & timely pay
- fair treatment, good wage, good working condition
- appropriate social media use
What should an accountant ensure when complying with organisational ethics and values ? P151
- Application of own ethical values and fundamental principles
- conflict:
- feelings known - management in business
- conflict resolution process use (referenced earlier)
What is a consequence of a business not being transparent with colleagues, customers, and supplier ? P151
- customer/ supplier reluctant to trade
- e.g. small print contract - later enforce
What is a consequence of a business failing to report financial and regulatory information clearly and on time ? P151
- inaccurate & untimely financial info = Poor management decision by business
- untimely tegulatory info = fines
What are the conseqeunces of not having clear policies regarding gifts and hospitality ? P152
- Adverse affect - business image
- accusations - unethical business dealings
What are the consequeces of not paying a supplier fairly and on time ? P152
- Adverse affect - supplier relationship
- e.g. supermarkets negative publicity - low price from farmers
