Ethics and Governance - Assignment Example

Ethics and Governance Name Professor Course Date Executive Summary This report was commissioned to examine the code of ethics of individuals and various accounting bodies in Australia. This report analyses and determines which codes of ethics are applicable to various bodies and individuals. Some of the principle code of ethics to be examined in the report includes integrity, public interest, objectivity, confidentiality, and professional independence. In addition, the report will examine the treats to the fundamental principles of the code of ethics. The threats in relation to the fundamental principles of the code of ethics include self-review threats, self-interest threats, intimidation threats, advocacy threats, and familiarity threats. In every organization, there should be safeguards to be applied to solve the threats posed in the code of ethics (Rossouw & Prinsloo 2010, p. 103). The first step is to assess whether threat is significant then take action by either mitigating or removing it. Safeguards can be either legislation or standards in profession in different organizations. Table of Contents Executive Summary 2 Table of Contents 3 Public interest 4 Integrity 4 Objectivity 4 Confidentiality 5 Professional Independence 5 Threats to the fundamental principles of the Code of Ethics 5 Concept of Safeguards 7 Conclusion 8 References 10 Principles of the Code of Ethics of the Professional Accounting Bodies in Australia Public interest One of the principles is the public interest. Members of the accounting bodies at all times should safeguard the interest of the employees and clients. The members should safeguard the clients so long as they are not conflicting with the loyalties and duties owed to the community laws. The member should accept their responsibility to the public. Members will be responsible to the employers, employees, credit grantors, governments, and investors. All these people will depend on the members for them to get financial objectives and advices when they want to acquire loan or venture into business. The members will also increase the community confidence by recommending sound and high quality financial advices. Integrity Another principle is integrity; members of the accounting bodies should be sincere, honest, and straightforward when approaching their professional work. This includes their duties of being accountable and responsible, reliable, and committed in all their professional relationships. Objectivity Objectivity is another important principle to be observed by the members of the accounting bodies. The members should act fairly and not allow bias, conflict of interest, and prejudice to override their objectivity (Moscardo 2013, p. 92). The members should maintain impartial attitude and provide recommended solutions to the client’s situations when providing financial advice. The members should be able to demonstrate their objectivity in various circumstances as they are serving in different capacities. If there is any conflict, the member should disclose it to the client with satisfying explanation of the circumstances adopted to solve the conflict. Confidentiality Members should observe confidentiality of the information they obtained from the clients. The information should be used on matters of professional duties for clients only. The member should reveal the information relating to the client when there is professional or legal duty. Professional Independence The member should maintain the principle of professional independence when providing financial advices to the clients. The members should provide their opinions without being influenced by ether the stakeholders or anybody else in the organization. The third party will be well informed of any lack of professional independence when the member avoids some circumstances and facts relating to the decisions made in the process of financial advice. The member should be in a position to disclose any act that is threat to the independence. This will make the clients to prove that the member is free of any lack of independence in the process of providing advice. Threats to the fundamental principles of the Code of Ethics These are the factors, which hinders the members from adhering to the ethical principles of accounting bodies in Australia. Self-interest threat: This is whereby the member influenced by other people who would like the member’s judgment to fit their interest. For example, the stakeholders in an organization can influence the member of accounting department to manipulate the financial statement to fit their interest. This will have changed or influence the interest of the member (Manfredi & Nappo 2013, p. 183). Familiarity threats: this is whereby the judgment of the member or any other professional is influenced by the fact that the person he/she is dealing with is close relative or has close relationship. This will make the member to be sympathetic to the client and he/she will not act to the required professional standards. The financial advice provided by the member will be compromised and the clients will not be satisfied by the advice provided. Intimidation threats: In case of intimidation, the member gave threats by stakeholders or any member in the organization. The member will not act as per the required standards because of the threats. He/she will force to act as per the threats given. The members of the public will not be satisfied with the financial advice given by the member because the advice will favor one person who threatens the member. Self-review threats: This is where the member is supposed to re-evaluate the judgments, he/she had made previously. It is a threat because the member cannot remember the judgments he/she had made before. If the member remembers the judgments, he/she might be tempted to manipulate the judgments to please the respective bodies to be served with the judgment. Advocacy threats: this is a position where the member is trying to promote an opinion or a position but someone else compromises the objective of the act. This is a threat because the member of the accounting body will forced to act unprofessionally to satisfy the person compromising him/her (Granville & Dine 2012, p. 283). Concept of Safeguards Safeguards are the actions or methods used to reduce or eliminate threats in the code of ethics to an acceptable level. Every organization has threats, which means it should have the safeguards to handle the threats when they emerge. When there is a threat in an organization, the first step is to determine whether it is significant. After determination, the next step is to take action by ether mitigating or removing it. There are two types of safeguards; those in the work environment and those created by legislation, regulation, or profession. Those created by profession include professional standards and monitoring, external reviews, corporate governance regulations, continuing professional developments, training, education, and experience needed someone to enter into the profession. Those safeguards in the work environment include; organizations’ conduct and ethics programs, recruitment procedures, appropriate disciplinary process, timely communication, and procedures and policies implemented. The stakeholders in this situation are Coca Cola and US soft drink giant. This is because the is stated that the US soft drink giant partly own the company and Coca Cocola is the main company which licensed Shanghai Shenmei Beverage and food Co. to produce Coca Cola in China. These are the two main stakeholders in the business. The ethical issues involved in this case include integrity, professional independence, and conflict of interest. The employees did not applied integrity their daily duties. This is because what they did showed that they were not sincere, straightforward, and sincere. They decided to embezzle funds for their own interest despite the fact that they are paid by the company. They were interested to have more funds than what they are paid in the organization. They did not showed any act of professional independence because they both colluded together to embezzle the funds. Both of them did not displayed act of professional independence (Tomlinson 2014, p. 14). It is not ethical to bribe the government for one to receive certain favor or a service. This is because each individual be it a resident or non-resident has a right to be served by the government without contributing any money or property as a bribe. Bribery is an illegal activity and any one practicing it is going against the laws. Any one practicing bribery, should be charged and punished according to the laws. There is no country which has a right to impose it own values on another country. This is because each country has its own way of fixing and practicing its values. Different countries have different types of constitutions, which guide them on their daily activities. When it comes to punishing the wrong doers, the country responsible should punish the wrong does as per its rule of law and not another country to fix how the rule of law is practiced. In my own country Russia, I will not accept any other country to impose its own values I the country. This is because in Russia we our own way of applying our values. If another country fix its own values in our country I will go against our human rights like freedom of expression, privacy, and even rights of disable people. This is because human rights in other countries are not the same as those of Russia. Conclusion Code of ethics should be observed in every organization. This is the crucial part for the organization, as it will guide the employees when performing their daily activities to the required standards. Each department should have a well-set code of ethics to be observed by the employees. For example, the professional accounting bodies in Australia have well established code of ethics to be observed by its members. This will enable the members to perform their financial advice activities to the required standards, which will company and its members to be trusted by the clients, employees, and other stakeholders (Braverman & Sidhu 2011, p. 69). Threats are available in every organization they should be eliminated or reduced to the acceptable standards using safeguards. Safeguards should be instilled to the employees or members during recruitment. This will enable the employees to handle threats professionally without further training from the organization. During recruitment, safeguards should be treated as a requirement for one to be recruited as an employee. Each country should not allow other countries to impose their values in the country. This is because it will affect the rights of the individuals as the rules and regulations are not the same in all countries. References Braverman, S., & Sidhu, R. (2011). Effective Streamlining of Ethics and Governance Processes: Fact or Fiction?. Research Ethics, 7(2), 66-70. Granville, B., & Dine, J. (Eds.). (2012). The Processes and Practices of Fair Trade: Trust, Ethics and Governance. Routledge. Manfredi, S., & Nappo, F. (2013). From Financial Stock Management to Intellectual Management: Ethics and Governance. Moscardo, G. (2013). Business ethics, corporate governance and corporate social responsibility. Rossouw, D. & Prinsloo, F. (2010). Ethics for Accountants & Auditors. OUP Catalogue. Tomlinson, A. (2014). The supreme leader sails on: leadership, ethics and governance in FIFA. Sport in Society, (ahead-of-print), 1-15. Read More