APES 110 Code of Ethics for Professional Assignment 2022

ETHICS AND GOVERNANCE

Executive Summary
The ethics is comprised of the moral as well as legal principles to enable dealing with
both good and bad situations. The ethical principles are not only applicable on the individual
conducts, but the organisational conducts as well. Different ethical theories have been
designed to guide the individuals to be aware of their conduct. The popular theories are that
of utilitarianism, deontology, egoism and others. The different theories are based on several
underlying principles and hence render the different guidance. The business organisations
must establish and implement ethical decisions with the help of the ethical decision models.
The AAA Ethical Decision Model is a simplified and systematic approach to form best
decisions in a given situation of ethical dilemma. The professional accountants are further
subjected to the APES 110 Code of Ethics to maintain the public confidence in said
profession.

Contents
Introduction................................................................................................................................3
Part A: Ethical Theories.............................................................................................................3
Analysis of behaviour of Mr Goodrich using the principles of the ethical theory of
egoism....................................................................................................................................3
Analysis of behaviour of Mr Goodrich using the principles of the ethical theory of
utilitarianism........................................................................................................................4
Analysis of behaviour of Arnold using the principles of the ethical theory of
utilitarianism........................................................................................................................4
Analysis of behaviour of Arnold using the principles of the ethical theory of
deontology.............................................................................................................................5
Part B: AAA Ethical decision-making model............................................................................5
Part C: APES 110 Code of Ethics..............................................................................................6
Conclusion..................................................................................................................................8
References..................................................................................................................................9

Introduction
Acting in an ethical way means distinguishing between the right and wrong and
choosing to do the right thing. The study of the ethical theories guides the individual to
ethical decision making in various phases of life. It is significant to note that the same
principles that apply to the individuals as a guide to ethical choices are applicable on the
businesses as well. Business ethics refers to the moral principles that guide the organisations
to act in a manner that is satisfactory to various stakeholder groups (Mellahi, Morrell &
Wood, 2010).
The aim of the following report is to analyse various features of the application of
ethical theories on business situations, an instance of which is given in the form of a case
study. Apart from this, the AAA Ethical Decision model will also be studied to guide the
characters in the case study reach an ethical decision. Further, an important aspect of the
business organisations is the role of the professional accountants, the same would be analysed
with the help of the APES 110 Code of Ethics.
Part A: Ethical Theories
The moral standards of ethics are applicable on the business organisations and the
behaviours as well. Thus, it would be right to state that the general ethical theories apply to
business ethics as well (Barry, 2016). It can be further rightly stated that the decision choices
of the individuals reflect one or the other terminology as based on the different ethical
theories. The following segment analyses the behaviour of various characters as per the
principles of various ethical theories.
Analysis of behaviour of Mr Goodrich using the principles of the ethical theory
of egoism
The first theory that is being used for the evaluation is the ethical theory of egoism.
The theory is not very much popular as the same focusses on the pursuance of the individual
interests only. The said theory belongs to the Teleological or consequentiality group of
theories, where the morality of an action is based on the consequences of actions. The
principles of the theory are exclusively focussed on the maximisation of the good of the agent
only (Rachels, 2012). It is stated in the principle that the individuals ought to act exclusively
in their self-interests. Thus, according to the theory if an act leads to the promotion of long
term interests of an individual, the same would be regarded as ethical (Ho, 2012).

In the context of the given case study, it must be noted that acting for the self-interest
is an important trait of the personality of Mr Goodrich, the CEO of the organisation. Some of
the instances from the case study that prove the same are he was regarded as the tough result
achiever and as a good manager did not bother to push the legal limits for the pursuance of
the annual bonus. As a manager he is always focussed on achieving the estimated profits and
the company investors loved him for the said reasons. It is further to be noted that when the
issue of the short payments of the workers’ wages and awards is disclosed, he is very
annoyed and insists on the hiding of the same facts. This is because the disclosure of the same
can lead to the conflicts with his position and reputation within and outside the organisation.
Thus, following the principles of the theory of ethical egoism, it can be concluded that the
actions of Mr Goodrich are ethical as the same leads to the fulfilment of the long-term
motives of him.
Analysis of behaviour of Mr Goodrich using the principles of the ethical theory
of utilitarianism
The next theory the application of which has been explored in context of the
behaviour of Mr Goodrich is that of the ethical theory of utilitarianism. The theory is
representative of the most influential consequential ethical philosophy that is based on the
concept of the utility (Lyons, 2015). According to the moral principles of the theory, an act is
morally acceptable if it leads to the production of the greatest net benefit to society as a
whole (Hollander, 2016). Thus, the act is focussed on the welfare of the individuals at large
and not just the individual interests.
As stated in the previous parts, the behaviour of Mr Goodrich is more inclined
towards the achievement of the individual interests. When Arnold, the management
accountant is suggestive of disclosing the issue, Mr Goodrich disregards the same. The said
act would undermine the interests of not only the workers, but also that of the regulators,
investors and the company as well. Thus, the said action does not provide utility to any other
group and hence is regarded as unethical.
Analysis of behaviour of Arnold using the principles of the ethical theory of
utilitarianism
The principles of utilitarianism have been stated in the previous parts. The principles
are focused on the benefit of the society as a whole. Some of the important aspects of the

actions of Arnold, being the management accountant of the enterprise, are highlighted as
follows. When the issue comes into the light, being the employee of the organisation Arnold
engages himself in the preparation of the reports to estimate the exact scale of the problem
and the means to address the same. He proposes both the options to disclose and not to
disclose to the COO, but stresses on the option to disclose the same as a genuine error so that
timely arrangements can be made from the banks to discharge the pending amount of the
short payments. The above instances from the actions of Arnold depict that his actions are
ethical as per the theory of utilitarianism, as the same take into account the utility of other
stakeholders as well.
Analysis of behaviour of Arnold using the principles of the ethical theory of
deontology
The next theory that has been explored in the context of the case study is that of the
deontology. The ethical theory is mostly associated with Immanuel Kant who stated that the
actions are morally right if the same are carried out with a sense of fulfilment of the duty
(Broad, 2014). The said theory derives its principles from the Greek word “deon” which
means duty. Thus, the intentions are more stressed upon in this theory rather than the
consequences. In context of the business scenario, it can be stated that the means of
deception, coercion and fraud must not be employed in the discharge of the business
functions (Chan, Fung & Yau, 2010).
The fact that Arnold is inclined towards the disclosure of the short payment issue as
supported by the suggestion of making arrangements with the banks to avoid the insolvency
is descriptive of his intentions of fulfilment of his duty in capacity of the management
accountant. It can further be stated that the chief duty of the management accountant of an
enterprise is the transparent reporting of the results. Thus, the fact that Arnold complies with
the organisational duties of working the extent of the problem, and proposes fair reporting
states that his conduct is ethical as per the provisions of deontology.
Part B: AAA Ethical decision-making model
Ethical decision making models refer to the framework that guide the decision makers
to make the confident and ethically competing decisions that adhere to the competing
standards for effective decision-making used by the organization (Reamer, 2013). In order to
devise the efficient decisions, it is imperative that the said decisions are comprised of
organization’s policies and values, applicable laws and regulations, and the generic societal

moral principles (Thomas, 2012). The ethical decision model developed by the American
Accounting Association is known as the AAA Ethical Decision Making Model. Mr Goodrich
can adopt the same to formulate an ethically sound decision by following the below
mentioned steps.
The first step is concerned with the clear definition of the problems. This is a
significant step because a clear definition of a problem shapes one’s understanding of the
causes behind it and the road map as to where to search for solutions. The problem in the
given case is that there has been a short payment of the wages and the same has come into the
highlight now. The second step involves the examination of the facts of the case and
identification of the issues that are on stake. In the given case, the issues that are on the stake
are that the organisation has failed to safeguard the interests of the workers. In addition, the
investors and regulators have not been shown the clear picture of the business activities. The
third step involves placing the issue in the social, ethical and the professional context and the
related principles and norms are identified. The concerned norms that have been recognised
in the given case are the financial reporting framework and the regulations of the Fair Work
Commission Act. The fourth step is comprised of the consideration of each course of the
action irrespective of the results of the same. There are two course of action in the given case
study that are either to disclose the short payment and pay the dues with retrospective effect
or do not disclose the same. The fifth step of the model involves the overlaying of the norms
identified in the third step with the actions identified in the fourth step. On the said matching,
it can be stated that the employee and workers are significant stakeholder group of the entity
and they must be fairly paid as per the legal statutes applicable. The sixth step involves the
consideration of the consequences. It can be concluded that the yet more practice of not
disclosing from here is unethical, beyond the legal framework and can lead to severe
penalties for the organisation and management. The final decision is taken in the last step.
Thus, Mr Goodrich can take the aid of the above model for the decision making process. The
management of the entity and the COO Mr Goodrich should accept the issue of short
payments and disclose the same to the authorities. Further arrangements must be established
to clear the short payment dues at the earliest.
Part C: APES 110 Code of Ethics
With the formation of the Accounting Professional & Ethical Standards Board
Limited (APESB) in the year 2006, the aim of the board was clear that was to regulate the

professional members registered therein and maintain the professional integrity of the
profession and the trust of public. The said code is applicable on not only the members of the
CPA Australia, but also on the members of the Institute of Public Accountants who are
professional accountants and the Chartered Accountants ANZ. Thus, the members of the
above listed bodies are mandatorily required to abide by the regulations and guidelines stated
therein. Hence, if Arnold were possessing the membership of CPA Australia, he would be
required to adhere to five basic fundamental principles. The said principles are mandatory for
both professional members in practice as well as the employment or business organisations.
These five principles are “integrity, confidentiality, objectivity, professional behaviour and
professional competence and due care (APESB, 2010).” The same have been mentioned in
the Part A, Section 100 of the Code of Ethics.
Further to state, the duty of the members is to identify and evaluate the threats if any
that are hindering the performance of duties of the professional accountants. The code has
prescribed the various classes of threats that a member may face during his or her
professional engagements. The five main category of threats that have been laid down in the
Section 100 of the code are the “Self-interest threat, Self-review threat, Intimidation threat,
Familiarity threat, and the Advocacy threat (APESB, 2010).” The basis of the self-interest
threat is the financial or another interest of one or more members of the organisation. Thus, if
such an interest is hampering the duties of the member, the same must be recognised and
examined. In the given case study, self-interest of the COO has led to the threats to the
engagement of Arnold, as the former is pressurising Arnold not to disclose the short
payments. The said non-disclosure is against the fundamental principles of the code. Further,
the Intimidation threat arises when one or more members of the enterprise extend actual or
perceived pressures on the professional member to act in a particular manner. Arnold is
exposed to the Intimidation threat as well as extended by COO Mr Goodrich. Arnold is
pressurised to not to disclose the short payments or his professional career would be
destroyed. The Section 300 of the Part C of the code also indicates a range of threats that
occur for the members in the employment in business context. These threats are – a member
being exposed to act in a manner that is opposed to acceptable professional standards, or the
regulations and acts in power (APESB, 2010). Further, a member may be forced to deceive
the regulators and indulge in unfair reporting practices by issuing the financial reports that are
comprised of the material misstatements. Arnold is facing the above threats as well. The
intensity of the threat must be identified to adopt the further courses of actions, which in

present case is very high because of the involvement of the COO himself. After the
recognition of the threats, the same must be brought down to acceptable low levels where
discharge of duties is possible.
The Code of Ethics also lays down the certain safeguards available to the members to
address the above-mentioned threats. The position of Arnold can be secured and some of the
safeguards can maintain the professional standards, available in Section 100. The other senior
member of the organisation where Arnold is employed can be consulted with the magnitude
of the issue, legally preferred course of action, and the fact of the perceived pressure. If the
threat is still not addressed effectively, Arnold can obtain assistance from another
professional member to adhere to the fundamental principles (APESB, 2010). Section 300 of
the Part C demonstrates further safeguards for the members engaged in the business, as
elaborated below. Arnold can obtain a legal advice and can bring a court action against the
respective members of the organisation. However, if Arnold opts not to indulge into formal
court action, the means of a formal dispute resolution process is also open (APESB, 2010).
The same can be conducted either within or outside the organisation. A side-by-side
consultation with the independent experts from other professional bodies is also a vital
safeguard.
If after the adoption of the above safeguard measures too, the threats cannot be
brought to an acceptably low levels, it is imperative to evaluate the degree of harm caused by
said principles towards of the fair discharge of professional duties. If the duties cannot be
discharged efficiently, the members have an option to dissociate themselves from such a
professional engagement. The above mentioned safeguard is available in the Section 320 of
the Code of Ethics (APESB, 2010). Arnold can adopt for the same, after due communication
to the organisation of the exact issues and the person concerned.
Conclusion
Few of the conclusions reached from the research conducted in the previous parts are
listed as follows. The first conclusion that has been reached is that the different ethical
theories guide the individuals in various contexts, as per the different underlying principles.
Accordingly, an act can be ethical as well as unethical depending on the ethical theory used
for the evaluation. The second conclusion is that the efficient business decisions are the prime
need of the dynamic business environment and ethical decision models like that of AAA
ethical decision model aids the business to achieve an ethically sound strategy to address an

ethical dilemma. It is further concluded that the professional accountants are further required
to abide by APES Code of Ethics, which elaborates a uniform set of principles to uphold the
highest professional and ethical standards.

References
APESB. (2010). APES 110: Code of Ethics for Professional Accountants. Melbourne, VIC:
Accounting Professional and Ethical Standards Board.
Barry, N. (2016). Business ethics. UK: Springer.
Broad, C. D. (2014). Five types of ethical theory. UK: Routledge.
Chan, K. C., Fung, H. G., & Yau, J. (2010). Business ethics research: A global perspective.
Journal of Business Ethics, 95(1), 39-53.
Ho, Y. H. (2012). A review of research on ethical decision-making of purchasing
professionals. Information Management and Business Review, 4(2), 72-78.
Hollander, S. (2016). Ethical Utilitarianism and The Theory of Moral Sentiments: Adam
Smith in Relation to Hume and Bentham. Eastern Economic Journal, 42(4), 557-580.
Lyons, D. (2015). Utilitarianism. Wiley Encyclopedia of Management, 1-4.
Mellahi, K., Morrell, K., & Wood, G. (2010). The ethical business: Challenges and
controversies. UK: Macmillan International Higher Education.
Rachels, J. (2012). Ethical egoism. Ethical theory: an anthology, 14, 193.
Reamer, F. G. (2013). Ethics and values. In Encyclopedia of social work.
Thomas, S. (2012). Ethics and accounting education. Issues in Accounting Education, 27(2),
399-418.