Last updated: 11 Dec 2023 09:00 Posted in: AIA
Christopher Cowton explains how you can make it easier to comply with the Code of Ethics by being an ethics influencer at your place of work.
One of the marks of a profession such as accountancy is that it has a remit to make the world a better place. Perhaps you don’t often think of your work in this way, but as a professional body, the AIA requires that you act in the public interest and thereby build trust in the profession.
On a day-to-day basis, this remit is achieved by using your professional judgement and skills in accordance with the five fundamental principles on which the Code of Ethics is based (see The five fundamental principles of the Code of Ethics). A by-product of this is that, as well as upholding the reputation of the profession, you will also be setting a good example to colleagues.
Most of the time, this is all reasonably straightforward. However, the Code of Ethics recognises that following the fundamental principles isn’t always easy. This is implied by the Code’s conceptual framework, which states that you need to be alert to threats to compliance with the fundamental principles. Section 120.6 A3 of the Code identifies five categories of threat: self-interest; self-review; advocacy; familiarity; and intimidation.
The five fundamental principles of the Code of Ethics
You must be straightforward and honest in all professional and business relationships.
You must not compromise professional or business judgement because of bias, conflict of interest or the undue influence of others.
You must maintain professional knowledge and skill (in practice, legislation and techniques) to ensure that a client or employer receives competent professional service.
You must not disclose confidential professional or business information or use it to your personal advantage, unless you have explicit permission to disclose it, or a legal or professional right or duty to disclose it.
You must comply with relevant laws and regulations, and avoid any action that may bring disrepute to the profession.
Encouraging and promoting an ethics-based culture
Section 200.3 A3 of the Code of Ethics states:
‘The more senior the position of a professional accountant, the greater will be the ability and opportunity to access information, and to influence policies, decisions made and actions taken by others involved with the employing organisation. To the extent that they are able to do so, taking into account their position and seniority in the organisation, accountants are expected to encourage and promote an ethics-based culture in the organisation.’
Examples of actions that might be taken include the introduction, implementation and oversight of:
Threats to compliance
If you judge that a risk is not at an acceptable level, you should eliminate it or, by means of the application of safeguards, reduce it to an acceptable level. At the extreme, you might need to decline or end the specific professional activity. If eliminating the threat means resigning your job or saying goodbye to a significant client, that is hard. Hopefully, it rarely comes to that.
This talk of threats to complying with the fundamental principles can sound worrying, perhaps even depressing. It suggests the possibility that professional accountants – perhaps even you – might fall short of professional standards. However, a more positive way of looking at this is to recognise that the time that the fundamental principles really matter is when they are under threat, when circumstances are not benignly conducive to doing the right thing. This is when the ethical rubber hits the road! Every time a threat to compliance with the fundamental principles is identified and dealt with appropriately, that is a victory for the profession’s public interest remit.
Organisational-professional conflict
Upholding the fundamental principles can be tough, as the fifth category of threat identified by the Code’s conceptual framework – intimidation – implies. Clients can be intimidating, and so can employers. Intimidation by managers might be seen as an example of organisational-professional conflict, which occurs when you are pressured to behave in a way that is incompatible with professional ethics. This can be a really difficult position to find yourself in.
To the colleagues with whom you are experiencing tension, you might appear uncooperative or disloyal. Yet, as a professional, there are two drumbeats you march to. As an employee, there is the organisational drumbeat; but as an accountant, you are expected to march to a professional drumbeat too. Thankfully, these are usually in sync, but sometimes they are at odds, and it becomes challenging to fulfil your professional responsibilities.
I don’t have space to go into all the ways in which you might deal with organisational-professional conflict when it occurs, much of which is situation specific. However, it is worth noting that, for AIA members, there is a secure section of the website where you can access a host of guidance and insights on ethics. What I do want to look at, though, is how you can prepare for such possibilities.
Be prepared
First, you can prepare yourself by ensuring that ethics is part of your professional development. The AIA regularly offers sessions that will help you to increase your competence and confidence in recognising and dealing with ethical issues.
Second, and perhaps less obviously, you can seek to change the organisation itself, so that organisational-professional conflict is less likely to arise. ‘Is that really my responsibility?’, you might ask. Well, according to the Code of Ethics, it might be. (See Encouraging and promoting and ethics-based culture, which applies to both business organisations and professional firms.)
While the examples of actions given in the Code of Ethics are useful, in my experience they represent a rather incomplete list. Conspicuous by its absence is an organisational code of ethics (or ‘code of conduct’). This is generally central to an effective ethics programme, forming, amongst other things, the basis for the ethics training and whistleblowing (or ‘speak up’, as many businesses prefer to call it) that the Code does refer to.
An effective ethics programme will help you to develop an ethics-based culture and hence a better environment for you to do your job professionally, reducing the risk of experiencing organisational-professional conflict. Although what is being discussed here is not part of the Code’s ‘threats and safeguards’ conceptual framework mentioned earlier, it is consistent with it. Encouraging an ethics-based culture within the organisation you work for will reduce the risk that significant threats to compliance with the fundamental principles will arise.
‘Using our professional judgement guided by ethical principles isn’t just a responsibility; it’s our roadmap to a brighter future. In our workplaces, even amid unique challenges, we must navigate with integrity, setting examples that positively impact our professional community. Let’s confidently forge ahead, refining our ethical compass, influencing our surroundings to champion integrity, and elevating our workplaces as pillars of ethical excellence within our societies.’ - Seth Ganu AIA Council Member
Common questions
Now, I can anticipate at least two questions about what I have just written.
Small and medium-sized businesses
‘This is all very well for large organisations, but what if the organisation I work for (or advise) is only small or medium-sized?’
I think the general point still applies, remembering that the Code is merely giving examples of what might be done to encourage and promote an ethics-based culture, which is the basic aim. Many of the ways in which smaller organisations do things are less formal, but I would still encourage serious conversations about ethics in advance of problems arising. Developing a code of ethics is a good focus for such conversations. Furthermore, if you are a supplier to large organisations, having a code of ethics in place is very handy when they decide to conduct ethical due diligence on you.
Your level of influence
‘I am only a junior/middle level employee. Does that mean the section doesn’t apply to me?’
I would argue that, even if you don’t think you have much authority to drive change, you need not be without influence.
First, you can make suggestions. Would your line manager, and perhaps their manager, support the idea of developing a code of ethics or having a clear speak up procedure, for example?
Second, you might not be able to get the organisation to invest in an ethics programme, but we all have some local influence. Why not initiate conversations with colleagues, perhaps around an ethical dilemma that might realistically arise in your work? Or, if you manage a team, you can make it clear that if anyone has any ethical concerns, they are allowed – indeed encouraged – to raise them.
No-one welcomes colleagues who point an accusing finger, but it is still possible to encourage people to raise a hand if they have a concern and to develop a local cultural norm of not moving on until that concern has been properly discussed.
Finally, remember you are not alone. Most people want to do the right thing and work for a decent organisation, and you are likely to find colleagues with whom you can make common cause – especially if they are accountants or members of other professions that have a code of ethics.
In conclusion
To conclude, how can you make the world – or your workplace, at least – a better place?
First and foremost, it’s by deploying your professional judgement and skills in accordance with the Code of Ethics, removing or mitigating identified threats to compliance with the fundamental principles and addressing organisational-professional conflict to the best of your ability.
Second, in doing this, you will be setting a good example to your colleagues – who might be equally keen to do the right thing in the workplace.
Third, you can undertake professional development in ethics and reflect on your experience, so that you are better prepared for recognising and addressing threats when they occur.
Fourth, use whatever influence you have, whether formal or informal, to encourage and promote an ethics-based culture, whether across the whole organisation or just your bit of it.
I’m not saying you have to be an ‘ethics warrior’, but I am encouraging you to do what you can to be an ‘ethics influencer’ – and a credit to your profession.
On 10 January, 2024 Christopher Cowton will present an online training session entitled ‘How to be an ethics influencer’, in which he will discuss some of the ideas in this article in greater detail.
Author biography
A regular contributor to the AIA’s professional ethics training, Chris Cowton is Emeritus Professor at the University of Huddersfield.
"Using our professional judgement guided by ethical principles isn’t just a responsibility; it’s our roadmap to a brighter future. In our workplaces, even amid unique challenges, we must navigate with integrity, setting examples that positively impact our professional community."
Seth Ganu, AIA Council Member