University College of the Caribbean
College of Graduate Studies
Individual Assignment #1
“Describe the management accountant’s responsibility for Ethical behaviour in the conduct of his/her duties”
Presented in partial fulfillment for the requirements of the course: (ACT611) Managerial Accounting: Information for Decision Making
Mr. Donald Smalling
January 13th 2013
Overview of Code of Ethics for Accounting Professionals
Accountants come face-to-face with several ethical issues on a daily basis. Deciding whether a company’s business practices and the actions of the principals or directors are ethical can be very difficult, but holding ethical standards is a fundamental part of the accounting profession. Business, accounting and banking personnel often find it hard to recognize serious ethical issues in accounting. It is not that they are unethical people, but frequently they are simply aware that an ethical problem is presenting itself.
Accounting professionals hold a very important role in organizations and in customer’s lives. Accountants play a key part in keeping the integrity and credibility of their clients. Accountants must be not only competent at their job like every other worker, but they must also hold the knowledge and experience to keep their professionalism, even at the most difficult times.
Keeping clients’ integrity means that accounting professionals have to communicate deeply to avoid all problems, and make sure that everyone knows what is going on with their own finances. Sometimes people forget that confidentiality is the strength of any professional accountant, and it can be hard. Clients’ information must be kept completely confidential unless the other party has a legal right to view it.
It is important to note that accounting and finance provides fair and accurate reporting of the financial position of an organization. There are six major ethical issues that occur in accounting and finance, these are reporting false income, falsifying documents, allowing or taking questionable deductions, illegally evading income taxes and engaging in fraudulent activities.
ETHICAL CODE OF CONDUCT FOR MANAGEMMENT ACCOUNTANTS
The “Standards of Ethical Conduct” set by the Institute of Management Accountants (IMA) require management accountants to: • Perform professional duties in accordance with relevant laws, regulations, and technical standards; • Refrain from engaging in any conduct that would prejudice carrying out duties ethically; • Communicate information fairly and objectively.
The IMA is the largest association of management accountants in the United States. The CMA (Certified Management Accountant) is the professional designation for management accountants and financial executives. It demonstrates that the holder has met the admission criteria and demonstrated the competency of management accounting knowledge required by the IMA. The Institute of Management Accountants (IMA) sets standards of ethical conduct for management accountants in the following areas: • Competence
Practitioners of management accounting and financial management have a responsibility to: • Maintain an appropriate level of professional competence by on-going development of their knowledge and skills. • Perform their professional duties in accordance with relevant laws, regulations, and technical standards. • Prepare complete and clear reports and recommendations after appropriate analyses of relevant and reliable information.
Practitioners of management accounting and financial management have a responsibility to: • Refrain from disclosing confidential information acquired in the course of their work except when authorized, unless legally obligated to do so. • Inform...