Standards of Ethical Conduct for Management Accountants PDF

Introduction to Standards of Ethical Conduct for Management Accountants This presentation will explore the ethical standards that guide management accountants. These standards are essential for maintaining the integrity and credibility of the accounting profession. by Cantunjos, Raymond and Catamba...

Introduction to Standards of Ethical Conduct for Management Accountants This presentation will explore the ethical standards that guide management accountants. These standards are essential for maintaining the integrity and credibility of the accounting profession. by Cantunjos, Raymond and Catambay, Joshua R. Learning Objectives: At the end of this presentation, the learners should be able to: 1. Understand the standards of ethical conduct for management accountants; 2. Identify the duties and responsibilities of management accountant in accordance with relevant laws, regulations and technical standards; 3. Apply the standards of ethical conduct in resolving conflicts; PROFESSIONAL ETHICS The Institute of Management Accountants (IMA) of the United States has developed a very useful ethical code called the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management which are essential for maintaining professionalism and trust in the field. a.) To maintain a high level of professional competence b.) To treat sensitive matters with confidentiality c.) To maintain personal integrity d.) To be objective in all disclosing ETHICAL STANDARDS EXAMPLE 1. Suppose employees could not be trusted with confidential information 2. Suppose employees accept bribes from suppliers STANDARDS OF ETHICAL CONDUCT FOR CMA & CPA 1. Competence – continuous development of knowledge and skills; 2. Confidentiality – confidential information are kept; 3. Integrity – conflict of interest is avoided; 4. Objectivity or Credibility – communicate information fairly and objectively 5. Resolution and Ethical Conduct Competence and Due Care Management accountants must possess the necessary knowledge and skills to perform their duties effectively. They also need to exercise due care and diligence in their work. 1 2 3 Continuing Education Professional Development Due Diligence Staying current with relevant laws, Improving skills and knowledge Exercising care and attention to detail regulations, and accounting standards. through training and certifications. in all professional activities.  INTERNATIONAL CERTIFICATIONS Certificate of Management Accounting (CMA)  One who has passed the rigorous qualifying examination, has met an experience requirement, and participates in continuing educations. He/She is granted by the Institute of Managements Accountants (IMA) Certificate in Public Accounting (CPA)  One who has met the pre-qualification educational requirements, passed the CPA Licensure Examinations given by the Professional Regulatory Board of Accountancy and has satisfied all other legal and regulatory requirements of a public accountant. INTERNATIONAL CERTIFICATIONS Certificate in Internal Auditing (CIA)  One Develop effective system to detect and prevent errors and fraud in the accounting records, it is common for the management accountant to have strong ties to control oriented organization such as the Institute of Internal Auditors (IIA) granting Certification in Internal Auditing. Confidentiality Management accountants are entrusted with confidential information. They must protect this information from unauthorized disclosure and use it only for authorized purposes. Client Information Internal Data Professional Relationships Protecting confidential Maintaining confidentiality Upholding the trust and financial data and business of sensitive financial reports confidentiality of strategies. and internal documents. professional relationships. Integrity and Objectivity Integrity requires management accountants to be honest and truthful in their professional dealings. Objectivity demands that they avoid bias and personal gain in their decision-making. Honesty Fairness Being truthful in all Treating all parties equally professional activities. and fairly. Transparency Impartiality Openness and disclosure of Avoiding bias and personal information. gain in decision-making.  COMPANY CODE OF CONDUCT A code of conduct defines how a company’s employees should act on day-to-day basis. It reflects the organization’s daily operations, core values and overall company culture. As a result, every code of conduct is unique to the organization it represents. - Customers - Company’s Property - Suppliers - Property of Others - Community - Co-employees - Head/Superiors  COMPANY CODE OF CONDUCT Those who engage in unethical behavior often justify their actions with one or more of the following reasons 1.) The organization expects unethical behavior 2.) Everyone else is unethical, and/or 3.) Behaving unethically is the only way to get ahead  SOCIAL RESPONSIBILITY OF MANAGEMENT ACCOUNTANT  Oversees managerial accounting activities and to function optimally, a CMA needs to understand organizations and their structure thru an organization chart which helps define the lines of authority, delegation of authority, line functions, and staff functions within an organization.  As the member of the management team performs vital staff functions.  SOCIAL RESPONSIBILITY OF MANAGEMENT ACCOUNTANT  Preparing reports, budgets and financial statements for internal users of information  Communicates with external users about the financial information fairly, objectively and competently prepared  Collaborates and participates in any aspects pertaining to environment and social awareness that could bring prosperity and rapid development of the society Professional Behavior Management accountants are expected to conduct themselves in a professional manner at all times. They should treat colleagues and clients with respect and uphold the reputation of the accounting profession. 1 Courtesy 2 Integrity Treating others with Maintaining honesty and respect and trustworthiness in all professionalism. professional interactions. 3 Objectivity 4 Confidentiality Avoiding bias and Protecting sensitive personal gain in information from professional judgments. unauthorized disclosure. Compliance with Laws and Regulations Management accountants must comply with all applicable laws, regulations, and accounting standards. This includes following tax laws, securities regulations, and professional accounting guidelines. Stay Informed Keep abreast of changes in laws and regulations. Adhere to Standards Follow established accounting principles and guidelines. Seek Guidance Consult with experts when needed to ensure compliance. Conflicts of Interest Management accountants must avoid situations where their personal interests could conflict with their professional responsibilities. They must disclose any potential conflicts of interest to the appropriate parties. Personal Gain Avoiding situations where personal gain may influence professional judgments. Fair Representation Ensuring that all parties are treated fairly and impartially. Transparency Disclosing any potential conflicts to relevant stakeholders.  RESOLUTION OF ETHICAL CONFLICT In applying the Standards of Ethical Professional Practice, you may encounter problems identifying unethical behavior or resolving an ethical conflict. When faced with ethical issues, you should follow your organization’s established policies on the resolution of such conflict. If these policies do not resolve the ethical conflict, you should consider the following courses of action:  RESOLUTION OF ETHICAL CONFLICT 1. Discuss the issue with your immediate supervisor except when it appears that the supervisor is involved. In that case present the issue to the next level. 2. If you cannot achieve a satisfactory resolution, submit the issue to the next management level. If your immediate superior is the chief executive officer or equivalent, the acceptable reviewing authority may be a group such as the audit committee, executive committee, board of directors, board of trustees, or owners.  RESOLUTION OF ETHICAL CONFLICT Contact with levels above the immediate superior should be initiated only with your superior’s knowledge, assuming he or she is not involved. Communication of such problems to authorities or individuals not employed or engaged by the organization is not considered appropriate, unless you believe, there is a clear violation of the law. 3. Clarify relevant ethical issues by initiating confidential discussion with an IMA Ethics Counselor or other impartial advisor to obtain a better understanding of possible course of action.  RESOLUTION OF ETHICAL CONFLICT 4. Consult your own attorney as to legal obligations and rights concerning the ethical conflict. Conclusion and Summary The ethical standards for management accountants are crucial for maintaining public trust and ensuring the integrity of the accounting profession. By adhering to these standards, management accountants can contribute to a fair and transparent business environment. Integrity Honesty and truthfulness Objectivity Impartiality and fairness Competence Knowledge, skills, and due care Confidentiality Protecting sensitive information Compliance Following laws, regulations, and standards Conflict of Interest Avoiding situations where personal interests conflict with professional responsibilities Professional Behavior Conducting oneself with respect and courtesy Conclusion and Summary It also suggests steps in resolving ethical conflict: 1. Discuss it with immediate supervisor first; 2. Bring up to the next management level if unresolved; 3. Talk to an IMA Advisor; 4. Consulting a lawyer in case of a legal offense