Enterprise Strategy: To Score Well on Ethics Questions in E3 (and T4 Part B), Students Need to Move beyond CIMA's Ethical Code and Apply a Framework That Covers Indifferent and Benign Behaviour, as Well as What Is 'Good' and 'Bad'
Sims, Adrian, Financial Management (UK)
Although questions about ethics appear in several of the exams, the topic is not really taught beyond the key points of the institute's code of ethics. As a consequence, candidates tend not to answer the more general ethics questions well because they lack the terminology to express themselves.
Ethics is a wide and loosely defined subject, touching on many areas. Pinning it down can be frustrating, but it's part of being a professional. Without an understanding of ethics, you'll miss out on marks in a number of papers.
The CIMA code of ethics is listed as required content in FL El, E2, E3 and P3. F2 candidates must also recognise "threats to the ethics of accountants from pressure to report 'good results". T4 part B often covers the code, too. The code (bit.ly/CIMAcocleofethics) sets the behavioural benchmark for CIMA members and students by applying the following five principles: integrity; objectivity; professional competence and due care; confidentiality; and professional behaviour. Most students learn these by reciting the mnemonics Oppic or Cippo. Fewer seem to practise identifying which principles relate to which issues covered in the exam questions. Instead, they write them all down in the hope that one will be appropriate. On the institute's website you can find several useful articles offering guidance on how to apply the code, a number of which appear in the blog written by CIMA's head of ethics, Tanya Barman)
Beyond the code--the hard part
The E3 syllabus requires candidates to know about "business ethics in general and the CIMA code of ethics for professional accountants (parts A and B) in the context of implementation of strategic plans". T4 part B allocates up to 10 marks to candidates who demonstrate this knowledge and make appropriate recommendations for action.
Some of the concepts in the code can be useful touchstones to apply to the behaviour of any manager or director. But where do issues such as bullying, discrimination, bribery, pollution or the sale of dangerous goods fit in? Their ethical aspects can't really be covered by terms such as "a lack of integrity" or "a breach of professional conduct".
To simplify matters, here are seven basic principles:
* Ethics concerns how an individual's behaviour affects other people's human rights. (Many readers would argue that the rights of animals and the environment are also ethical matters. For the sake of simplicity, let's say that animal cruelty and environmental degradation are ethical issues because they affect the happiness of nature lovers and the wellbeing of future generations.) A flood, an air crash or mass poverty are unfortunate, but they aren't unethical per se. The human decisions that caused these or did nothing to prevent them, or that sought to help the victims, are where ethical/unethical behaviour comes in.
* Ethical behaviour is concerned with trying to do good and not doing anything that could harm people.
* Ethical behaviour is judged by consequences, not motives. This means that we can avoid complex debates such as whether one company's act of generosity is less good ethically because the firm did it purely as a publicity stunt, or whether a harmful act can be considered less bad ethically because a board never intended its decision to have detrimental consequences.
* Concepts of good and bad are culturally determined, varying among nations and over time. Ethics refers to the socially accepted norms of what's good and what's bad. To some people, an approach to corporate governance that prioritises the interests of shareholders may look appropriate, whereas other people may see it as selfish because it fails to consider the rights of other stakeholders or the needs of society. CIMA won't expect you to favour one set of ethics over another, but you do need to show that you understand that alternatives exist. On the whole, the examiners anticipate that you will apply European ethical standards, but they will give credit to a clear justification for applying different ones. …