Question

. Firms with higher ethical standards will experience a higher level of economic performance than firms with lower or poor ethical standards. Do you agree? Why or why not

. Review the code of ethical conduct for management accountants. Do you believe that the code will have an effect on the ethical behavior of management accountants? Explain.

Answer 1

I) Yes, firms with higher ethical standards will experience a higher level of economic performance than firms with lower or poor ethical standards because through adopting and implementing the strong ethical standards will initiate a positive trend for the firm which will bring higher degree of creditors and shareholders’ satisfaction, higher investing and lenders confidence, getting better financial results quarter by quarter. On the other hand, firms with poor ethical standards will always lacks the personal and professional trust and confidence of stakeholders and always lead to negative financial results.

II) As per IMA, the codes of ethical behavior of management accountants (MA) are:

1. Competence: The MA should maintain updated knowledge and skills.

2. Confident working: The MA musts perform their duties as per relevant laws and regulations.

3. Conclusive : The MA should be conclusive enough to provide recommendations on the decision taken.

4. Confidentiality : The MA must maintain confidentiality of clients records and informations.

5. Credibility : The MA must put his/her credibility signatures in all the works, reports and recommendations undertaken by him/her.

6. Conflicts resolver : The MA should not indulge in any kind of conflicts of different parties, but should be conflicts resolver and bring professionalism in his/her working.

The prescribed code of conduct by IMA do enable MA to perform his/her duties and act professionally with working with clients. The MA have a prescribed arena within which he/she works and brings ethics in their behavior, working and recommendations.