Report reveals gap in rhetoric, reality on business ethics - CGMA
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CGMA report reveals gap in rhetoric, reality on business ethics 

May 21 2012

Despite more commitment to ethical performance, pressure to act unethically on rise, study by American Institute of CPAs and Chartered Institute of Management Accountants shows

NEW YORK and LONDON (May 21, 2012) – Four out of five businesses worldwide have committed to ethical performance, but rhetoric does not always match reality, according to a new report from the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA). The report found a weakened “tone from the top” and more pressure on financial professionals – especially in emerging economies — to act unethically.

Managing Responsible Business, a global survey of almost 2,000 Chartered Global Management Accountants (CGMA) in nearly 80 countries, found that 80 per cent of organisations provide a code of ethics to guide employees about ethical standards in their work, up from 72 percent in 2008. However, only 36 per cent collect ethics information such as the number of employees attending ethics training and actions taken on hotline reports. Since ethical performance can only be managed with the right information, this suggests ethical practice falls short of stated policy, according to the report.

What’s more, neither senior management nor boards of directors seem to be reviewing, analysing and monitoring ethics information at the level recorded four years ago. In 2008, 86 per cent of senior management and 68 percent of boards reviewed ethics data, according to the report. In 2012, it was 78 per cent and 56 per cent, respectively. This “weakened tone from the top” comes as more than a third of those surveyed, 35 per cent, said they sometimes or always feel pressured to compromise their organisation’s standards of ethical conduct. This compares to 28 per cent of respondents in 2008. The pressure is most pronounced in developing economies such as Malaysia, 54 per cent, and India, 51 per cent, and lowest in the U.K. and U.S., where 18 per cent of those surveyed feel pressure.

“Positive steps have been taken to build the architecture for ethics through codes and policies, but pressure to act unethically persists and companies across the globe continue to be faced with the challenge of strengthening ethical culture from the top,” said AICPA President and CEO Barry Melancon, CPA, CGMA. “CGMAs can play a key role in guiding companies in how to better collect and report ethical information by drawing on their training and understanding of professional ethics, as well as their skills in obtaining, analysing and acting upon management information.”

The report is a follow up to one conducted by CIMA in 2008 and is the first time responses from the U.S. have been included. Geography and company size are key factors in the findings, with larger companies from more developed economies generally having more advanced ethics programs. U.S. companies, for instance, are most likely to monitor or evaluate ethical standards, according to the report.

Charles Tilley, FCMA, CGMA, Chief Executive of CIMA (Chartered Institute of Management Accountants) commented: “Management accountants play a critical role in linking the objectives of the organisation across the whole business and are therefore well-placed to constructively challenge how things are done and offer an objective view.  They are in an excellent position to be the ethical conscience of their organisation.”

Other key findings from the report include:

• Ethical Performance: More than half of companies, or 57 per cent, now provide training on ethical standards, 49 per cent provide a hotline for reporting conduct that violates the organisation’s standards of ethics and 25 per cent provide incentives for staff to uphold the organisation’s standards of ethical conduct, according to the report.

• CGMAs and Ethical Performance: The main ways CGMAs say they contribute to management of ethical performance are by upholding their professional code of ethics, 86 per cent; ensuring the integrity of management information, 83 per cent; leading by example, 80 per cent.

• Pressures to Act Unethically: Asked how likely various situations were to result in pressure to compromise standards of ethical business conduct, those surveyed identified the top situations as: working with colleagues from different functional areas within the organisation; meeting reporting deadlines; compiling management accounts; and dealing with customers.

• Business Issues: When asked how relevant various ethical issues were to their organisations, the top issues cited by respondents were security of information , 91 per cent, safety and security, 88 per cent, bribery, 78 per cent, discrimination, 75 per cent, conflicts of interest, 74 per cent, environmental, 73 per cent and supply chain, 72 per cent.

Chartered Global Management Accountant (CGMA)
Two of the world’s most prestigious accounting bodies, AICPA and CIMA, have formed a joint-venture to establish the Chartered Global Management Accountant (CGMA) designation to elevate the profession of management accounting. The designation recognises the most talented and committed management accountants with the discipline and skill to drive strong business performance.

Chartered Institute of Management Accountants (CIMA)
The Chartered Institute of Management Accountants, founded in 1919, is the world’s leading and largest professional body of Management Accountants, with more than 195,000 members and students operating in 176 countries, working at the heart of business. CIMA members and students work in industry, commerce, the public sector and not-for-profit organisations.

American Institute of CPAs (AICPA)
The American Institute of Certified Public Accountants (AICPA) is the world’s largest association representing the accounting profession, with nearly 377,000 members in 128 countries and a 125 year heritage. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.

 

 

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