Magazine article Public Finance

Inside the Moral Maze

Magazine article Public Finance

Inside the Moral Maze

Article excerpt

Barry is struggling with his conscience. He is a senior accountant responsible for providing management information to several major budget holders in his organisation. He has developed a very good working relationship with this group of senior managers over the years and has a good understanding of their departments and the issues they face.

One of these budget holders, Colin, has raised a problem about a capital project that is overrunning its approved budget. He has asked Barry to turn a blind eye to future costs, which he is going to charge to other codes, concealing the adverse variance. How should Barry handle this situation?

Considering this case from the outside, it is easy to take the moral high ground. Barry must obviously 'do the right thing' and refuse to condone Colin's proposal. But on the ground it is not as easy as that for Barry. He has spent many years building up an effective partnership with Colin, and respects his abilities and judgement. If he reports him, and Colin is reprimanded, it will sour the relationship.

So Barry is under pressure, both because of Colin's seniority, and because the two managers like and respect each other. Under pressure, it is human nature to be tempted to take the easy option.

The situation described above is simplistic, but is not unlike the dilemmas that many of us have faced or will have to face in our careers as accountants. Questions of ethics have become more prominent in the past few years - they are closely entwined with the need for better governance structures - and it is not difficult to call to mind a number of headline cases where ethics and governance have failed, including WorldCom, Enron and Parmalat.

The International Federation of Accountants has risen to the challenge and developed a Code of Ethics that applies to all professional accountants, wherever they are in the world, and whichever kind of business they are in. CIPFA has formally adopted the code, in common with the other members of the Consultative Committee of Accountancy Bodies and accountancy bodies around the world. It is now the CIPFA Standard of Professional Practice on Ethics (the 'Sopp'), replacing the December 2000 Sopp.

The code, with a CIPFA foreword explaining its particular relevance to accountants in the UK public sector, can be seen on the CIPFA Ethics web page at http://www. …

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