• 15 Marks

CSME – Nov 2018 – L2 – Q5 – Ethics in Business

Discuss the six stages in handling ethical conflicts based on ICAN's professional code of conduct.

You have been invited to facilitate a session on how to deal with ethical conflicts based on the Institute of Chartered Accountants of Nigeria code of professional conduct. Discuss the six stages in handling ethical conflicts.

  1. Define the Issues:
    The first step is to clearly identify and define the ethical issues at hand. Accountants should establish the facts of the situation and recognize any ethical dilemmas that might exist. This includes asking whether the ethical issue is a personal responsibility or that of another party.
  2. Identify the Threats:
    Once the issues are defined, the accountant must consider the nature of the threats to compliance with ethical principles. These can include self-interest threats, self-review threats, advocacy threats, familiarity threats, or intimidation threats that may compromise integrity and objectivity.
  3. Assess the Significance of the Threats:
    This stage involves evaluating the seriousness of the identified threats. Accountants must determine whether existing controls adequately mitigate these threats or whether they pose a significant risk to compliance with ethical principles.
  4. Introduce Safeguards:
    If the threats are deemed significant, accountants should implement safeguards to reduce these threats to an acceptable level. This may involve additional training, establishing policies, or changing processes to ensure ethical compliance.
  5. Take Action:
    If safeguards do not adequately address the threats, more decisive actions may be necessary. This could include declining to work with a specific client, whistleblowing, or resigning from a position if ethical standards cannot be maintained.
  6. Decide What to Do:
    Finally, accountants should decide on the appropriate course of action. Seeking confidential advice from ICAN or other relevant bodies can help guide decision-making. This ensures that the accountant takes an informed and ethically sound path.
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