Corporate Greed vs. IMA's Ethics Code: Recent Corporate Financial Scandals-Enron, WorldCom, and Others-Damaged Accounting's Image, but IMA's Standards of Ethical Conduct Can Provide Guidance for Future Ethical Dilemmas

By Haywood, M. Elizabeth; Wygal, Donald E. | Strategic Finance, November 2004 | Go to article overview

Corporate Greed vs. IMA's Ethics Code: Recent Corporate Financial Scandals-Enron, WorldCom, and Others-Damaged Accounting's Image, but IMA's Standards of Ethical Conduct Can Provide Guidance for Future Ethical Dilemmas


Haywood, M. Elizabeth, Wygal, Donald E., Strategic Finance


IN RECENT YEARS accountants and the profession have come under fire as a result of breakdowns and misdeeds in the financial reporting process. An apparent lack of ethical behavior exhibited by decision makers forms a core area of concern.

The predominantly negative media coverage of the financial and accounting activities of Enron, Tyco, WorldCom, Adelphia, and other U.S. companies has been exhaustive. Thanks to this barrage of negative images, it is probable that many observers of the profession think that the reputation of financial professionals has been damaged irreparably--that it's unsuitable to use the terms "ethical" and "accountant" in the same sentence. What's more, the potential exists for this image to become even more magnified if we don't attempt to restore confidence in the financial reporting process and trust in finance professionals.

One starting point in developing a case for public trust in our profession is to consider how ethical perspectives have been breached in the past and how to avoid these violations in the future. The Institute of Management Accountants' (IMA) "Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management" convey how ethical behavior should be practiced in the profession. In these Standards, IMA has identified areas of ethical professional conduct for its members. They are competence, confidentiality, integrity, and objectivity. As shown in the above table, IMA delineates the professional's responsibilities in each of these four areas.

These Standards are one of the most important, powerful, and positive tools available to financial professionals in communicating the importance of ethical conduct as part of our professional responsibilities.We discuss this point and describe how members can also use the Standards to better understand the ethical dimensions of past abusive practices that were reported in the media.

A FRAMEWORK FOR ETHICAL CONDUCT

The IMA Standards of Ethical Conduct are designed to be proactive, helping finance professionals to link ethical perspectives directly to their ongoing workplace responsibilities. In a perfect world, IMA members would employ these Standards in their professional lives, and there would be little or no notice of this by the general public. Given the barrage of reported misdeeds in recent months, however, the Standards can take on added meanings and uses.

It's probable, for example, that most people (including young men and women who will be deciding upon future career paths) are familiar with the term "ethics" but are less likely to be able to identify what "ethical behavior" should mean to an accounting/finance professional. Stated differently, media reports of the past year suggest a clear picture of wrongdoing but are less instructive on why and how such behaviors were unethical.

To better understand the connection between ethics and the alleged corporate crimes, we relate some of these incidents to specific violations of the IMA Standards of Ethical Conduct regarding professional responsibilities for competence, confidentiality, integrity, and objectivity. Understanding the ethical implications of past conduct can help us in developing strategies for restoring public trust in the future.

The IMA Standards are presented below in bold type and are followed by a discussion of types of behavior that violate specific aspects of these standards. All these incidents have been reported in numerous media.

COMPETENCE

* Perform their professional duties in accordance with relevant laws, regulations, and technical standards.

Relevant Laws: It's against the law to destroy evidence in an official proceeding, yet several professionals have been charged or convicted of doing so. For example, in the summer of 2002, a Houston court convicted Arthur Andersen of obstructing justice by shredding documents and deleting files connected with the Enron investigation. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Corporate Greed vs. IMA's Ethics Code: Recent Corporate Financial Scandals-Enron, WorldCom, and Others-Damaged Accounting's Image, but IMA's Standards of Ethical Conduct Can Provide Guidance for Future Ethical Dilemmas
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.