Institute of Management Accountants Statement of Ethics

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Being ethical and building ethics into your everyday work is critical for the success of financial professionals. In this lesson, you'll learn more about the IMA's Statement of Ethics and guidelines for its implementation.

The Importance of Ethics

You wouldn't have to talk to too many people to figure out that ethics, the basic principles of right and wrong, is important in most every part of life. We want to be treated fairly and with dignity. We want our politicians and role models to be respectful, upstanding citizens. We want our bosses to keep their promises and show compassion.

Michael Josephson of the Josephson Institute identified 12 principles of ethical behavior for business leaders; among them are loyalty, accountability, leadership, and commitment to excellence.

For individuals in the accounting profession, ethics play a particularly important and central role in their day-to-day responsibilities. Many accountants are tasked with handling not only money, but also sensitive, confidential information that could be exploited for personal gain. Accordingly, acting responsibly, exercising sound moral judgement, and presenting truthful and accurate information about a client's finances is a critical component of the profession.

The Institute of Management Accountants, an international association of accountants and financial professionals in business, recognized the significance of ethical standards in the profession they cover. One of their central goals is to promote 'the highest ethical standards for internal financial management practices.' To that end, they created two documents relevant to ethical behaviors:

  • Statement of Ethical Professional Practice
  • Values and Ethics: From Inception to Practice

Let's look at a summary of each document and review how both provide a good basis for ethical practice in the accounting profession.

Statement of Ethical Professional Practice

The statement begins by reminding IMA members of their responsibility to behave ethically and commit to ethical professional practice guided by honesty, fairness, objectivity, and responsibility.

The code of conduct states that members must meet standards in the following areas or be subject to disciplinary action:

  • Competence: This includes proper education and training, as well as abiding by laws and regulations in business dealings. The document also explains that accountants should offer timely and accurate counsel to clients and customers.
  • Confidentiality: It may seem like a simple thing, but accountants are advised to keep confidential information confidential, and not use it for personal gain or advantage.
  • Integrity: Working with integrity includes avoiding conflicts of interest, and abstaining from behaviors that might discredit the profession as a whole.
  • Credibility: Fair, objective, and relevant information should be presented in a timely manner, while keeping transparent lines of communication open.

In the document, the IMA also prepares for the proper handling of ethical conflicts by, first, following organizational policy, and then turning to the IMA's suggestions. The order of action for handling an ethical dilemma, according to the IMA, includes:

1. Discussing a potential ethical conflict with a supervisor.

2. Talking with an IMA Ethics Counselor to help with resolution.

3. Meeting with an attorney to discuss legal obligations and rights.

Values and Ethics: From Inception to Practice

In this report, the IMA presents the steps an organization must follow to define and develop their own codes of conduct. Among the recommendations: developing a company's behavioral values, integrating ethical thinking into all areas of business, and working to monitor and improve compliance.

According to the IMA, accounting professionals must act as change agents in their organization, helping to ensure that ethical standards are being implemented throughout. The IMA recommends that accountants take the lead in developing their business's own code of ethics and a confidential helpline for employees.

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