The Institute of Management Accountants commemorates World Ethics Day by highlighting the work done to improve the ethics of accountants, while recognizing that much remains to be done.
The organization has set up an online service IMA Ethics Center where members can find continuing professional education courses, information on ethics case study competitions, and an ethical professional practice statement. World Ethics Day is an annual event hosted on October 20 by the Carnegie Council for Ethics in International Affairs, which has been in existence for seven years.
The accounting profession has a long history of promoting ethical conduct, and groups such as the American Institute of CPAs, the International Federation of Accountants, and the International Ethics Standards Board for Accountants have their own codes of ethics or professional conduct. However, widely publicized scandals involving auditing and accounting fraud, as well as persistent calls for greater independence and objectivity of auditors, have drawn attention to the shortcomings of many organizations.
The IMA wishes to raise awareness of the accounting profession on ethics. “We have a lot to do when it comes to ethics,” said Jeff Thomson, President and CEO of IMA. “The Ethics Center on our website provides access to educational programs. We have made all of our ethics courses free to members. We have case competitions that we do around the world just to make it real in terms of real case scenarios, gray areas, actions and things like that. We have an ethics committee that has done an incredible job for us over the years in the areas of advocacy, education and awareness. For example, they worked more recently on conflict of interest policy. All IMA members are guided by the Statement of Ethical Professional Practice, which is an ongoing commitment to ethics and trust. We try to model appropriate ethical behavior from the point of view of the IMA brand and reputation. After all, we are the guardians of our brand and our reputation. Trust, ethics, integrity and fundamental values are the basis of our relevance and the sustainability of our profession. Before moving on to cool stuff like strategy and digital technologies, this is the hallmark of our profession. “
Accountants may be pressured to cut corners, but having a written code of conduct can help provide advice. “There are pressures and risks of ethical violations, whether it’s moving into the digital age, algorithmic bias or working remotely,” said Thomson. “Competition, of course, has always been part of the fraud triangle. Unfortunately, the incidences of fraud are still quite high, much higher than we would like. “
Fraud, when discovered, often gets the most attention and negative publicity. “Hardly a week goes by that we don’t read about ethical breaches in the newspapers and see the impact that not only has on individuals but on organizations,” said Russ Porter, CFO of IMA. “A lot of people think of accounting is just about keeping numbers, but ethics is about making sure we report accurately and with integrity in the numbers. “
Stavros Thomadakis, the outgoing President of the International Board of Ethics Standards for Accountants, said Accounting today in a Podcast this week coincided with World Ethics Day, on the challenges faced in establishing ethical accounting practices over the past six years. “It is clear that ethics is a very difficult subject,” he said. “There are many challenges, and in order to do our job we have had to deal with many national differences, many growing public perceptions of the duties of accountants and changing circumstances. Crisis, scandals, failures – in short, a complex and dynamic global environment in which a global standard-setter must operate and achieve the production of global operational standards.
The IMA worked with the International Ethics Standards Board for Accountants and its parent organization, the International Federation of Accountants, to align their ethical standards.
“Our statement of ethical business practices, with its principles and standards – by definition, being a member of IFAC and one of its 180 member bodies representing over 3 million accountants – our ethics policy framework s ‘aligns with the policies of the Ethics Standards Board of IFAC,’ says Thomson. “There has been a lot of writing and discussion on whistleblowing, but generally speaking we strongly support the work of IFAC, especially within its Committee of Professional Accountants in Business where we are very active members. . We seek to make sure we understand the risks and biases, inherent and otherwise, as we make incredible advancements and advancements in digital technologies. “
Technology during the pandemic forced many accountants to operate remotely away from their desks, giving them access to their companies’ financial systems day and night, and forcing them to rely even more on their ethical code of conduct. Various forms of technology can also raise ethical concerns, as software takes greater control over processes.
“As you get into these advanced topics like strategy, digital implementation, and robotic process automation, ethics get even more involved in these areas,” Porter said. “Algorithmic bias has implications both for the financial profession and for society in general. This is one of the areas where management accountants can contribute their skills in terms of implementing controls and process auditing to ensure that when organizations implement technology, they do so without certain faults that we have read in the application. of today’s technologies.
Some algorithms may have an unconscious racial bias, as in the so-called “racial normalization” sometimes used in legal regulations which may lead to discrimination.
“When we talk about algorithmic bias, it’s not something new that has suddenly developed,” Porter said. “Rather, it’s the application of existing biases in more automated routines. Accountants have always had a responsibility to act ethically and to ensure that their work products reflect the ethics of the organizations to which they belong. As we introduce algorithms that automate the thinking process, if people code their biases, either from a project design perspective or from the background data used to create the algorithms, it can create problems later. This is an area where management accountants can really affect, identify, and provide advice on how to lessen the effect of any bias built into an algorithm.
CFOs in particular have assumed a greater role in the technology used by their organizations.
“As our profession has become more connected to the value chain, more interdisciplinary, with regards to operations, IT and data science, it increases the obligation and the opportunity for the CFO and the company. CFO’s team to monitor these risks very carefully, ”said Thomson. .
In recent months, the IMA has offered a new course on ethics in the digital age. “This is talking about algorithmic biases and other types of biases that we need to be aware of,” said Thomson. “The power of technology and all that it brings to automation and innovation is tremendous. But like any other phenomenon, there are opportunities and risks. Who better in the organization than the CFO? “
He quoted the Association of Certified Fraud Examiners Report to the Nations 2020, which estimated a total of 2,500 cases of workplace fraud in 125 countries, and more than $ 3.6 billion in economic losses (see the story).
“We have to be vigilant,” said Thomson. “When we do our training, whether it’s ethics training or cyber data security training for our staff, we have a very simple slogan: ‘Be vigilant, stay alert. ‘ As members of the finance and accounting community, we are incredibly well positioned to be leaders in ethics, education, fraud detection and prevention through risk management, internal controls, and more. . The challenge is probably going to keep increasing instead of decreasing, and we need to be on top.
Education will play an important role in training accountant ethics. “I cannot stress enough the need for ethics education, not only in academia, but also in the workplace,” Porter said. “Sometimes we teach ethics in academia as a secondary subject when I think it really should be more integrated into almost all of our courseware in the accounting and finance profession. The emphasis on ethics throughout an organization and to all employees on a regular and recurring basis really emphasizes the role of ethics in the culture of an organization and how it works. ‘integrates into the way an organization operates. I would really like to see an even greater emphasis on reiterating and reinforcing ethical business principles throughout their organizations.
Separately on Wednesday, the IMA opened a public comment period on an exposure draft titled “Essential Management Accounting Skills for All Entry-Level Accountants,” which identifies some of the key management accounting skills needed by entry-level accountants today. . The IMA Management Accounting Skills Working Group developed the proposal in response to new and emerging technologies, the increased importance of data analysis and the changing role of the professional accountant. The Exposure Draft identifies the skills and learning outcomes required for entry-level management accountants and offers course topics about them.
“The role of the management accountant is undergoing immense change, due both to technological advances which rapidly eliminate routine tasks and to increasing volumes of data combined with more sophisticated analyzes,” said the chairman of the committee. IMA Research Foundation, Raef Lawson, in a statement. “Changes to the accounting curriculum in colleges and universities should reflect these developments whether students plan to enter public accountancy, industry, or another area of accounting. It is crucial that they develop skills in the areas of accounting and strategic management analysis; management of revenues, costs and profitability; technology, data analysis and management; and professional ethics.