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Having developed a robust code of ethical conduct, it makes good business sense to publish
it on the organisation’s website, to illustrate to interested third parties (including existing
and potential customers and suppliers) that yours is an organisation that places great
importance on high standards of ethics and behaviour. This will also send a positive message
to persons considering seeking employment with the organisation and, with regard to other
readers, publishing the code may even assist with the implementation of the organisation’s
anti-fraud and bribery policies.
5.3 Internal Training
Training is an important step in introducing a new code of ethical conduct. It is important to
explain the rationale behind the implementation of a code – what it is intended to achieve,
and why a principles-based approach has been adopted. Furthermore, users of the code will
benefit from practical training on how to make ethical decisions. If employees (together with
their managers) and subcontractors have received appropriate training (including practical
exercises) and had the opportunity to raise any concerns, then the process of embedding
the code into the organisation has already begun.
Without appropriate training, there is a risk that the introduction of the code will be
perceived as authoritarian, or there may be a misconception that its sole purpose is to
remedy unethical conduct of the past. It is vital that the training sensitively addresses these
issues, explaining how the code is to be used in practice, and making clear that it applies to
everyone. Training sessions also provide an opportunity to test the code and identify any
unnoticed flaws in the drafting of the code.
It is appreciated that the downtime associated with training may not be attractive for
smaller organisations. However, simply distributing copies of the code, or referring staff to a
central document, is unlikely to be an effective means of instilling the key messages.
Although physical training sessions do have costs associated with them, they increase the
likelihood of attendees engaging with the code. Of course, training methods should be
proportionate to the size and structure of the organisation.
In any organisation, there is a need for ongoing awareness of the code and, periodically, this
may entail further training sessions. Such sessions must be mandatory, although they will be
shorter, and might be incorporated into less formal staff meetings. They will provide an
opportunity for the organisation to re-emphasise the importance that it places on its code of
ethical conduct. They are also an opportunity for staff to refresh their understanding of the
code.
5.4 Use of Case Studies
Proportionate guidance, training, advice and other support must be made available to users
of the code of ethical conduct. A proportionate and effective measure, in this respect, is the
availability of case studies. CCAB has taken a lead on this in respect of the code that applies
to its members – the Code of Ethics for Professional Accountants, issued by the International
Ethics Standards Board for Accountants (the IESBA Code). CCAB’s Ethical Dilemmas Case
Studies are available at http://www.ccab.org.uk/reports.php.
In particular, training is likely to be more effective if it incorporates practical examples in the
form of case studies – illustrating situations that the organisation’s employees and
subcontractors may encounter. Those attending the training should be asked to voice their
opinions before alternative possible solutions to the dilemmas in the case studies are
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provided. Higher levels of participation tend to arise from discussions in smaller groups,
although ideas emerging from those discussions may also be fed back to the larger group. In
this way, the use of relevant case studies enhances the ethical sensitivity and confidence of
staff and other users of the code. In introducing the case studies, it is important to point out
that the ‘right’ course of action will not always be clear, as there may be more than one right
answer. Such is the nature of ethics. The objective is to exercise people’s decision-making
ability.
5.5 New Managers and Staff
An organisation’s code of ethical conduct must be introduced to new employees of the
organisation, at all levels. It represents a benchmark for acceptable behaviour, and should
form an integral part of employees’ terms of employment. At the earliest possible stage, the
organisation should make clear that it aims to employ (or otherwise engage) only those who
are ethically fit. These measures demonstrate the importance that the organisation attaches
to meeting an acceptable standard of behaviour. In particular, time should be set aside to
review the code with new employees as part of their induction programme.
5.6 Discipline
The purpose of a code of ethical conduct is to bring about consistently high standards of
behaviour and internalise ethical decision-making. To this end, an effective disciplinary
process is an important component in supporting the code. It indicates, both to those bound
by the code and to all external parties, the organisation’s commitment to the principles and
policies therein.
Prompt, effective and fair action must be taken against those who are found to have
breached the code. Action must be proportionate and transparent. Any variation between
the standard of behaviour required by the code and that which is seen to be the practice
may seriously erode trust and be very damaging to relationships, both within the
organisation and externally. In such cases, the organisation must be seen to enforce its own
code of ethical conduct.
5.7 Performance Appraisals
On the other hand, high standards of ethical behaviour should be rewarded. The
organisation’s appraisal process provides an opportunity to review how an individual has
lived up to the organisation’s values, and demonstrated competence in ethical decision-
making. It is also a useful mechanism to achieve ongoing awareness of the code.
In recognising what an individual has achieved, managers should also consider how it was
achieved, and staff should be rewarded appropriately. If an organisation gets this right, then
all employees and subcontractors will be seen to be rewarded on merit. It will then be
possible to look to the ethical standards of those rewarded, understand the reasons for the
rewards, and attempt to emulate them. Ideally, this creates a virtuous circle – to the benefit
of the organisation, its staff and its stakeholders.
5.8 Tone at the Top
Those responsible for governance of an organisation must convey to others their
commitment to the organisation’s code of ethical conduct, and make clear that the values in
the code are applicable to all staff, subcontractors and others. Furthermore, senior
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management must be seen to be fully supportive of the code. A proper ‘tone at the top’ is
essential for the code to be embedded within the organisation.
Management at all levels must regularly seize opportunities to remind employees, and
others, of the reasons for having a code of ethical conduct and, in particular, of the
organisation’s values expressed within it. If all those with managerial responsibilities set an
example to others, it will be easier to cascade the code’s contents throughout the
organisation, as individuals tend to follow the example of their seniors.
5.9 Access to Advice
Quite apart from training sessions and regular performance appraisals, the code of ethical
conduct still needs ongoing support through the availability of information and advice from
a competent source. Organisations may consider incorporating into their codes how the
reader can obtain clarity concerning any aspect of the code, or ethical advice in any given
situation. Otherwise, separate guidance must be provided. Such guidance may include case
studies (see section 5.4 above) or the use of frequently asked questions (FAQs).
For one-to-one advice, staff, for example, might be required to consult their line managers in
the first instance. But all users of the code must be aware of the individual or department
within the organisation responsible for developing and maintaining the code, and so know
whom to contact for clarification. In addition, employees might be assigned a mentor, who
may be able to give general advice concerning the code, and even specific advice to consider
in respect of an actual dilemma encountered. Confidentiality should be assured whenever
necessary, and organisations might find it beneficial to provide access to an external party
for independent, confidential advice. Confidentiality is particularly important for an
individual seeking ethical guidance in respect of an actual dilemma being faced.
5.10 Whistle-blowing/Speak up Obligations and Mechanisms
Employees and subcontractors must also have the confidence to challenge others when a
breach of the code of ethical conduct is suspected. In some organisations, an employee or
subcontractor will be expected to report suspected breaches to an appropriate individual or
department in the first instance. Almost all organisations will be expected to have formal
whistle-blowing (or ‘speak up’) procedures in place, although these need not be
sophisticated in smaller organisations. However, effective procedures will recognise the need
to protect and support the whistle-blower to the greatest extent possible. In a smaller
organisation, this will often involve the use of an external party, which may provide
reassurance with regard to appropriate confidentiality.
Whistle-blowing/speak up mechanisms – both internal and external – should be set out in
the code of ethical conduct itself (or else the code should state where detailed guidance
may be found). Such mechanisms must make clear that suspicions must be reasonable (not
malicious), and that reports will be received and acted upon in confidence.
There are likely to be occasions on which employees and subcontractors are uneasy about
reporting suspected breaches. It is advisable to make staff aware of external organisations
that support whistle-blowers. Such external organisations provide confidential advice
concerning the safeguards available to individuals who identify a need to ‘blow the whistle’.
9
9For example, in the UK there is
, www.pcaw.org.uk.
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5.11 The Role of the Professional Accountant
Professional accountants are required to comply with the codes of ethics issued by their
professional bodies. The codes of the CCAB member bodies are aligned to the IESBA Code.
As a professional accountant (likely to have a high profile within the organisation), one must,
at all times, observe and demonstrate the highest standards of ethical behaviour. The
fundamental principles contained within the IESBA Code are universally relevant, and for a
professional accountant to act with integrity implies accepting the responsibility, where
appropriate, to promote ethical behaviour in others.
Fundamental ethical principles within the IESBA Code
Integrity: to be straightforward and honest in all professional and business
relationships
Objectivity: to not allow bias, conflict of interest or undue influence of others to
override professional or business judgments
Professional competence and due care: to maintain professional knowledge and
skill at the level required to ensure that a client or employer receives competent
professional services based on current developments in practice, legislation and
techniques and act diligently and in accordance with applicable technical and
professional standards
Confidentiality: to respect the confidentiality of information acquired as a result of
professional and business relationships and, therefore, not disclose any such
information to third parties without proper and specific authority, unless there is a
legal or professional right or duty to disclose, nor use the information for the
personal advantage of the professional accountant or third parties
Professional behaviour: to comply with relevant laws and regulations and avoid
any action that discredits the profession.
10
Where practicable, the fundamental ethical principles within the IESBA Code may form the
basis of the ethical principles within the code of ethical conduct of the organisation in which
the professional accountant operates. The professional accountant should be familiar with
these principles, and adhering to them will help to set the ‘tone at the top’ of the
organisation.
10International Ethics Standards Board for Accountants, Handbook of the Code of
Ethics for Professional Accountants, July 2013
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6. MONITORING AND REVIEW
Monitoring of the code is essential, to ensure that it is still relevant and being observed in
practice. If, for example, an internal whistle-blowing mechanism is in place, it might serve to
highlight areas on which attention should be focused, ie, areas of the code that are less
effective. Conversely, areas may be identified that are currently of less relevance, and which
may be amended or removed in order to streamline the code.
6.1 Ongoing Review
The organisation is likely to have several sources of information built into its procedures,
which may be used to assess the effectiveness of its code of ethical conduct. Depending
upon the size and structure of the organisation, the following sources of information may be
available:
Employee appraisals: As already noted, appraisals should consider not only what
was achieved but how it was achieved. Key performance indicators may be set that
directly relate to compliance with the code. Employee (and subcontractor) appraisals
are opportunities for embedding the code, but also for identifying weaknesses in the
code.
Questions and feedback from training sessions: Particularly during the code’s
infancy, training sessions may be viewed, in part, as the piloting of the code. They will
highlight the issues being encountered, and the use of case studies will be
particularly illuminating in this respect.
Internal reporting (or whistle-blowing/speaking up): In a large organisation, it will
be worthwhile analysing the incidents reported, remembering that the objective of a
code of ethical conduct is to promote ethical behaviour. Every identified breach of
the code should be examined to see if it provides evidence of a failure of the code in
some respect.
Investigations and disciplinary action taken: It is hoped that instances of disciplinary
action will be few. However, as with internal reporting, on occasions they may
indicate weaknesses in the code, and opportunities to make the code more robust
should not be overlooked.
Advice sought: Where employees, subcontractors or others request clarification of
the code of ethical conduct, this may indicate areas in which the code itself requires
clarification.
Employee suggestions: In accordance with the high-level corporate values adopted
by an organisation, suggestions from users of the code should be welcomed and
treated with respect. These are a valuable source of information, and the
organisation may even choose to introduce a rewards mechanism related to valuable
suggestions. Even in smaller organisations, managers should welcome suggestions
received informally.
Customer feedback: As with feedback and suggestions from employees, customer
feedback should be seen to be appreciated. Even complaints (one might say
‘especially complaints’) are valuable feedback on the organisation’s code of ethical
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conduct, and may also be a fruitful source of case studies. In many cases, relating a
complaint to the code will serve to enhance customer relations.
Organisations of all sizes are likely to have various mechanisms for gathering information
and feeding it into enhancements to the code of ethical conduct. Where a shortcoming of
the code becomes apparent, it may require immediate remedial action. However, the
benefit of such a change may be outweighed by the costs – both of effecting the change and
of potentially confusing users by implementing frequent changes. It may be more
appropriate that valuable feedback be aggregated and assessed periodically. Any major
changes may be accompanied by the launch of a revised code of ethical conduct.
6.2 Periodic Review
Regardless of the size of the organisation and the volume of feedback accumulated on an
ongoing basis, a code of ethical conduct must be reviewed at regular intervals to ensure that
it is still fit for purpose. To some extent (appropriate to the size and structure of the
organisation), the review process should again involve employees. They may well be best
placed to understand the issues, present ideas and suggest suitable improvements.
The periodic review process may actively seek feedback from employees. A survey of other
stakeholders (including whether the organisation appears to be living up to the expected
standards of behaviour) will elicit information, as well as providing a customer relations
opportunity. The organisation may also benchmark its code of ethical conduct against those
of similar organisations, competitors, customers, suppliers, etc, with a view to identifying
any areas where positive improvements could be made.
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Documents you may be interested
Documents you may be interested
