Impact of Ethics in the Workplace: A Comprehensive Report

This report delves into the crucial topic of ethics in the workplace, examining its impact on professional conduct and behavior. The report begins with an introduction to the importance of ethical codes in guiding decision-making and workplace practices. It then presents the findings of a face-to-face interview with a financial accountant at a managerial level, exploring their experiences and perspectives on the company's code of ethics. The interview covers various aspects, including awareness of the code, ethics training, reporting procedures for unethical behavior, and the impact of ethical conduct on working attitudes. Furthermore, the report investigates the role of professional accounting bodies, specifically CPA Australia, in addressing ethical issues within the accounting profession. It identifies common ethical dilemmas faced by accountants, such as conflicts of interest and fraudulent activities, and explores how these bodies police their codes through penalties and standards. The report concludes by highlighting the significance of ethical behavior in maintaining trust and integrity within the financial market and the accounting profession.

ETHICS IN WORKPLACE

TABLE OF CONTENTS
INTRODUCTION.......................................................................................................................................1
SERIES OF INTERVIEW QUESTIONS....................................................................................................1
CONDUCTING THE INTERVIEW...........................................................................................................2
ETHICS IN PROFESSIONAL ACCOUNTING BODIES..........................................................................4
Ethics issues and codes to police them....................................................................................................4
Penalties for violation..............................................................................................................................6
DIFFERENCES AND SIMILARITIES IN EXPECTATIONS...................................................................7
REFLECTION............................................................................................................................................7
CONCLUSION...........................................................................................................................................8
REFERENCES............................................................................................................................................9

EXECUTIVE SUMMARY
Accounting offers vital and valuable services to both private and public sectors – essentially to
everyone who utilizes information. These services are normally discharged by honorable,
qualified professional with a robust sense of public duty. Nonetheless, similar to other
professions, there are unethical professionals whose behavior must not belittle the whole
profession. For regulating such critical profession and assure its integrity, people licensed to
practice accounting are subject to rules and laws of the professional bodies like CPA Australia
and State Boards of Accountancy. Such boards are government bodies comprising of non-CPA
and CPA officeholders.
A company’s code of ethics and professional behavior include the principles every staff member
is expected to follow. Such principles are aimed at guiding the decision-making and behavior at
workplace. Typically, such codes considerably impact workplace practices, as the employees
will comply with these principles while working, however, the amount of impact a code has, is
based on how the company uses it. This is because without strict execution by the business, the
employees may not even be aware of the ethics code in the company. Hence, it becomes the
responsibility of people in authoritative positions, like a manager, to lead by example so that
their subordinates can learn from them and inculcate ethics in their work.
In the present report, a financial accountant working at a managerial level has been interviewed
face-to-face to understand how code of ethics impact their work life and attitude toward work.
This financial accountant is employed with a private firm. Besides this, research has also been
conducted on a professional accounting body to comprehend the issues that arise for it and how it
polices its codes.

INTRODUCTION
A company’s code of ethics and professional behaviour include the principles every staff
member is expected to follow. Such principles are aimed at guiding the decision-making and
behaviour at the workplace. Typically, such codes considerably impact workplace practices, as
the employees will comply with these principles while working, however, the amount of impact
a code has, is based on how the company uses it. This is because, without strict execution by the
business, the employees may not even be aware of the ethics code in the company. Hence, it
becomes the responsibility of people in authoritative positions, like a manager, to lead by
example so that their subordinates can learn from them and inculcate ethics in their work (Baker
& Comer, 2011). In the present report, a financial accountant working at a managerial level has
been interviewed face-to-face to understand how the code of ethics impact their work life and
attitude toward work. This financial accountant is employed with a private firm. Besides this,
research has also been conducted on a professional accounting body to comprehend the issues
that arise from it and how it polices its codes.
SERIES OF INTERVIEW QUESTIONS
As the goal of the present report is to investigate how professional behaviour and ethics
impact individuals in their real work life, hence below mentioned interview questions have been
formed:
Q1. Does your company have a well-documented code of ethical conduct and professional
behaviour?
Q2. If your answer to the above question is “Yes”, then what is your awareness level regarding
concerned policies and procedures?
Q3. Does your company require ethics training?
Q4. Are there adequate procedures in place to report an unethical behaviour?
Q5. Is ethical behaviour a norm in your company?
Q6. If yes, how does it impact your working attitude and professional behaviour?
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Q7. Is unethical behaviour penalized in your company? What are the implications of breaching
the company’s codes?
Q8. Does the presence of a penalizing system impact how you approach ethics at the workplace?
Q9. Is ethical conduct rewarded in the company?
Q10. Do the senior managers of the company display high ethical standards?
Q11. What is the amount of pressure you feel in your company to get involved in what is deemed
as unethical behaviour?
CONDUCTING THE INTERVIEW
A1. The company has a properly documented and communicated code of ethics in place. This
Code outlines the basic ethical do’s and doesn't and it also outlines what a member should do
when faced with an ethical dilemma. There are several courses of action; one is required to take
as per the Code when faced with some ethical issue. Though this does not provide a complete
solution to a problem, it definitely guides in decision-making.
A2. My personal awareness level with the company’s Code of Conduct policy is very high. I am
totally aware of what is expected out of me in terms of my professional conduct and behaviour.
Apart from me, I strongly believe that my colleagues and subordinates are also aware of the
company’s policies because it reflects in their workplace behaviour. Moreover, our organization
ensures that every member is introduced with the Code at the time of Induction.
A3. Ethics training is given time-to-time because accounting ethics education is seen by our
management as a promising remedy for addressing the ethical crisis facing our profession.
Despite having a full-proof code of conduct, we also face ethical issues time and again and hence
provision of ethics training is imperative.
A4. Yes, there are clearly defined procedures for reporting any unethical or illegal behaviour
observed in the company. There are whistleblower resources which an employee can use to bring
to notice any such act. The identity of the whistleblower is completely confidential, and hence
people do not have a second thought about making waves regarding any such unprofessional
conduct. In fact, our organization has set up an Office of Ethics and Compliance for overseeing
these matters. Hence, employees are always encouraged to report their concerns.
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A5. I would not say it is 100% a norm, but the majority of us try to embody ethics in our
workplace behaviour. Most of the managers try to lead by example, and their subordinates try to
follow the lead. However, we have not been immune to any unethical or unlawful act. There
have been instances when a few people place their self-interests above the professional
requirements. They get induced by gifts, self-interest, self-review or familiarity to the client.
A6. Personally, I always stick to ethical norms and rules of professional conduct at work. I stay
away from any such thing that can hamper my objectivity and integrity. Moreover, being on a
managerial level, I have to set an example for my subordinates. I work with professional
competence and due care, always defend the confidentiality of information at hand and comply
with applicable rules to avoid doing anything which may discredit my position and profession.
A7. Yes, ethical behaviour is definitely penalized at our company. The case is first overseen by
the Office of Ethics and Compliance. The people there look at the severity of the misconduct and
then decide a suitable punishment. If the breach is regular, then the employee is given a warning
and his work is monitored for a long time. If the violation is severe, the Office takes the case to a
review panel in the management, or an independent review panel if the management is at fault.
The maximum punishment ranges from suspension to expulsion.
A8. Although I am naturally guided to work ethically, the presence of a penalty system definitely
helps me stay away from even the thought committing a wrongful act.
A9. There is a proper mechanism for rewarding people who report unethical misconduct because
the information of the whistleblower is kept confidential and hence no one can know reported the
issue. However, that individual is definitely appreciated by the management, and this thing is
considered during his/her performance evaluation. So, it is not completely the case that there is
no motivation behind reporting unprofessional behaviour.
A10. To the extent I know, most of the senior people in my company practice and preach ethical
and professional conduct. The managers are very cautious about their position in the company
and do not want to disparage it.
A11. I definitely feel the pressure to not engage in any unethical activity because the people
around me are also acting in moral ways plus there is always the fear of negative implications
associated with the violation.
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ETHICS IN PROFESSIONAL ACCOUNTING BODIES
Ethics issues and codes to police them
All through 2001 and 2002, financial scandals in Australia and the USA exhibited how
the efficacy of the financial market is underpinned by the assumptions of ethical behaviour and
trust of corporate managers. The collapse of firms like OneTel and HIH Insurance in Australia,
and Global Crossing, Enron and WorldCom in the US has resulted in a loss of trust in the system
of financial accountability and reporting by the investing parties. The CPA Australia was
researched to identify the ethical issues facing the accounting profession and how it polices its
codes (BPP Learning Media, 2016).
In discharging their professional duties, members of the body, i.e. the CPAs are expected
to comply with auditing and accounting standards outlined in the AASB respectively. They are
also obligated to conform to tax rules promulgated by regulatory and government bodies. Like in
other professions, some accountants face ethical dilemmas. Most cases of violations could be
categorized as either regular ethical dilemmas which are simple to resolve or as complicated
cases who resolutions are difficult to achieve (CPA Australia Staff, 2013). These ethical
dilemmas include payroll confidentiality, conflict of interest, fraudulent or illegal activities,
pressure from the top to inflate earnings, and customers requesting manipulation of financial
records to name a few. Compliance with the basic principles and code of ethics laid down by the
Accounting Professional and Ethical Standards Board (APESB) might be potentially threatened
by a wide spectrum of circumstances (Leung, Coram & Cooper, 2012). Several threats belong to
the below-mentioned categories:
 Self-review – E.g. discovering considerable error while re-evaluating work of
professional accountant; reporting operation of financial systems after being part of their
design and/or execution; prepared the initial data utilized for generating records which
pertain to the engagement (Marley & Pedersen, 2015).
 Self-interest – E.g. monetary interest in a client or having joint monetary interest with a
client; contingent fee pertaining to an assurance engagement; having close ties with the
client, likely future employment with the client (De Cremer et al., 2011).
 Familiarity – E.g. an engagement team member having immediate family or close
relations with client officer or employee, who can exert significant and direct influence
on the subject matter; accepting preferential treatment or gifts from client, unless the gift
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value is evidently immaterial, long-term connection of senior people with assurance
client (Shafer, 2013).
 Advocacy – E.g. promoting shares in a listed company when the company is a client;
serving as an advocate on the part of an assurance customer in disputes or litigation with
third parties (Bazley, Hancock & Robinson, 2014).
 Intimidation - E.g. being coerced with litigation, replacement or dismissal pertaining to
client engagement; being forced to decrease the amount of work wrongly to mitigate fees
(Cunningham et al., 2014).
Exhibit 3 emphasizes the different violations done by practising CPAs. As identified by
Tidrick, there were 327 cases where the institute penalized members between 1980 and 1990. Of
these:
 41 pertained to domain of technical standards
 37 concerned failure to cooperate with an inquiry or abide by its requisites
 28 related to “acts discreditable” (CPA Australia Staff, 2013)
 21 pertained to breach of “general standards.”
 7 were “independence” breach
170 ethics cases were identified from Jan 1994 to December 1995 in 32 states in the
country by Badawi and Rude who surveyed the body’s CPA letters during that period. The most
often breached rules were:
 Rule 202 – Conforming to standards
 Rule 203 – Accounting Principles
 Rule 501 – Acts Discreditable (BPP Learning Media, 2016)
 Rule 201 A – Due Professional Care
 Rule 201 B – Due Professional Care
Of these 170 cases, 38 involved crime and criminal-related convictions, spanning from
making incorrect claims to a federal agency to mail fraud to conspiracy and bank fraud. Rest of
the cases involved everything from hiding assets, impediment of justice, money laundering,
bribery and theft, and even murder (Trevino & Nelson, 2016).
APESB, is an autonomous body which was set up in 2006 by CPA Australia and
Chartered Accountants in Australia and New Zealand, to reorganize its Rules of Conduct and set
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up the APES 110 Code of Ethics for Professional Accountants (Code) in 2006. This is the code
that members of this professional body know and follow now. Exhibit 2 states the contents of the
Code which has two segments. The first one titled Principles has six articles concerning the basic
norms of ideal conduct, widely highlighting the responsibility of accounting profession to the
clients, public and other practitioners (Bennie & Mladenovic, 2015). This Code is binding on
every practising as well as non-practising CPA who is a member of the Institute. They should
conform to the majority, but not all, of the norms mentioned in the conduct in every type of
engagement or be ready for disciplinary actions.
Penalties for violation
Besides entering a Joint Ethics Enforcement Program, the CPA Australia, as well as
several state CPA societies, have an ethics committee for hearing complaints. Both these
societies can also act autonomously on a case or can consent to taking the case to CPA Australia
trial board panel. This panel has the authority to: a) acquit the member; b) admonish the member;
c) suspend the membership for two years; and d) expel the member (Van Akkeren & Tarr, 2014).
The CPA Australia bylaws (not the Code) rule automatic expulsion of members who
have not file tax returns, committed a crime or assisted in the preparation of fraudulent and false
tax returns. CPA Australia penalties for ethical misconduct and wrongdoing range in severity. In
several cases, the panel suspends or reprimands a CPA, obligating the member to finish a
definite number of hours of continued professional education. The objective is to help the
member acquire a suitable degree of professional awareness and competence (Bampton &
Cowton, 2013). Though aimed at a positive resolution, the CPE demands are same as “serving
time”. People who do not meet these CPE conditions are made responsible for “acts discreditable
to the professions” and debarred as “second-time offenders”.
State accountancy boards also have their individual norms of conduct and panels for
enforcing them. These boards can reprimand a member, but, they can also revoke or suspend the
license to practice. This is a very severe penalty because the punished individual will no longer
be able to use the title “CPA” and hence will not be able to sign audit reports. On the other end,
when the CPA Australia expels a CPA, it does not prevent him/her from continue practising
accounting (Abbott, 2014). However, the body can suspend or expel the membership, and the
person should eliminate any mention of his/her connection with the CPA Australia or the state’s
CPA society from their website, letterheads and other materials used in the office. CPAs whose
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violation of ethics need some kind of corrective measures might also be subject to more
monitoring by the body. For instance, the CPA may have to recruit an unaffiliated accounting
company to audit the former’s work, like financial statements he made for a customer. Such
monitoring might go on a frequent basis for a long-time period (Henderson et al., 2015).
DIFFERENCES AND SIMILARITIES IN EXPECTATIONS
While there are some differences in the way professional bodies and individuals working
in accounting profession adhere to codes, there are some similarities as well. It is believed that
supported by a robust ethical culture, every accountant could be immensely effective in playing
his/her key role – drawing on both their comprehension and training of professional ethics, plus
their abilities in acquiring, assessing and acting on management information – to help their
companies and clients in achieving long-run sustainability. While some accountants may get
induced to go the unethical way, professional bodies are always very strict as far as their rules
are concerned (Cameron & O'Leary, 2015). Compliance with these rules is their top-most
agenda, and they have stringent measures in place to police any wrongful behaviour.
On the other hand, some accounting professionals may not keep their interests first before
that of their profession and hence not follow the ethical path. It could be alluring to lie low and
not respond as required when faced with an ethical issue. However, for accountants with high
integrity, they owe it to their profession, career and community to react to breaches they may
find rather than being complicit in illegal activities (Knechel, & Salterio, 2016). Barriers to
proper adherence to codes of professional conduct could be a) the organization does not have a
well-documented and communicated code of standards and ethics; b) if there is a code of ethics,
it is not advocated by the leaders; c) the individual does not understand the code of ethics and has
ethical dilemmas; and/or d) despite awareness of code of ethics, the person chooses to give
priority to self-interest (Muzio et al., 2016).
REFLECTION
Thinking about my career in the accounting industry, I have come to realize that as an
Accountant, I will be handling a broad spectrum of sensitive and privileged data in my routine
tasks. Moreover, because I will be working with numbers which may have implications on stock
prices and bonuses, I might also be faced with ethical issues. However, I need to make sure that I
never let such dilemmas get to me and I always follow the path of ethics. This is because, if
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during the very beginning of my career, I indulge in fraudulent activities or get induced, I may
face serious repercussions like being suspended or even expelled (Sheehan & Schmidt, 2015).
In order to always perform in the correct interests, if ever I am faced with a dilemma or
issue, I will first identify whether it is regulated by policy or law. For this, I would look up the
Code established by the APESB plus the policies and procedures book of my employer. These
will help me if I am not certain about the ethics of a case I am confronting. Secondly, I would
assume an outsider’s view, i.e. when I was a student, what I learnt about accounting ethics.
Separating the issue from the professional and personal feelings will help me view the issue in a
different light (Half, 2017).
I will also think about the stakeholders, people or companies that will be impacted by the
issue or by my decision to take or not take a certain action. Lastly, if I am required to report an
illegal or unethical conduct of my employer or colleague, I would seek legal counsel – either
from an autonomous firm or in-house – or will resort to the whistleblowing resources of my
company. Though an in-house protocol may not provide a sure-shot solution, but it will certainly
direct my decision making (Baïada-Hirèche & Garmilis, 2016).
CONCLUSION
Accounting offers vital and valuable services to both private and public sectors –
essentially to everyone who utilizes information. These services are normally discharged by
honourable, qualified professional with a robust sense of public duty. Nonetheless, similar to
other professions, there are unethical professionals whose behaviour must not belittle the whole
profession (Mescall, Phillips & Schmidt, 2017). For regulating such critical profession and
assure its integrity, people licensed to practice accounting are subject to rules and laws of the
professional bodies like CPA Australia and State Boards of Accountancy. Such boards are
government bodies comprising of non-CPA and CPA officeholders. CPAs who work for private
companies are also subjected to the code of ethics of these groups. Although there is not
sufficient literature on this matter, violations of accounting codes are being looked into, judged
and being exposed publicly. The penalties for violations range from suspension to expulsion
(Shafer, Simmons & Yip, 2016).
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