ETHICAL DILEMMAS:

What would you do?

At some point in your career you may be faced with an ethical dilemma. Given that you are required to
comply with the CIMA Code of Ethics in order to uphold your professional standing what would you do?
Ethical dilemmas do not always have a prescriptive and clear cut response (unless there is evidence of
breaking the law or accepted regulations). You may have discovered something you believe to be illegal or
fraudulent, or someone may be pressuring you to mislead, or to report in a way that is against or marginal
to accepted accounting standards or outside the law. Conflicts of interest and confidentiality are also
ethical issues.
By using the Code as guidance members and students can review their options and decide on a course of
action in order to resolve the issue. As a trained professional you have a responsibility and a professional
duty to exercise good judgement and be accountable for your actions to the profession and the public.
Understanding the wider strategic implications and the impact on the business, or society, is part of your
role.
These case studies are linked to the fundamental principles which a CIMA professional accountant is
required to uphold:
a) Integrity
b) Objectivity
c) Professional competence and due care
d) Confidentiality
e) Professional behaviour
The case studies demonstrate how the Code of Ethics works in practice and guides you to areas in the
Code which would apply. It is not exhaustive. There is also a checklist (see full checklist) you can work
through when faced with an ethical dilemma to help you determine a course of action.

CHECKLIST (summary)
Key questions to also consider when facing an ethical dilemma rest on a personal feelings you generally
know if something feels right, if you are unsure ask yourself:
Would I feel comfortable about my professional peers, family and friends knowing about the situation?
How would I feel if I saw this in a newspaper?

Check all your

facts and where
possible document

Possible course of
action and internal/
external escalation

Seek professional
or legal advice

Is it ethical - have
you considered
the ethical issues
involved?

Identify the
affected parties

Refuse to remain
associated with
the conflict

Is it legal?

Identify which
fundamental
principles are
affected

If you have concerns you most probably have a dilemma! The longer you leave resolving it, the more
chance there is for there to be repercussions for the organisation, yourself and the standing of the
profession.
Please see CIMAs full ethical checklist.

Ethical dilemmas: what would you do?

CASE STUDIES
1. Case study one: takeover information.
You are financial director of a large multinational organisation and have been privy to information about a
takeover bid to acquire a rival firm. A family friend is considering selling shares in this rival organisation and
has asked you, as an expert in the industry, for advice on this matter.
What would you do?
Integrity

This situation has a clear impact on you integrity fair dealing and
truthfulness. Your obligations in this instance are to confidentiality. See
section 110.

Objectivity

Your objectivity would be at risk if you allow a personal relationship to

influence the ethical and legal responsibilities you have to your employer. See
section 120.

Professional
competence and due
care

You have a duty to maintain professional knowledge, to act diligently in

accordance with professional standards and to uphold legal requirements. See
section 130.

Confidentiality

You have an obligation to refrain from disclosure of information outside the

firm or employing organisation. See sections140.2, 100.5d.

Professional behaviour

You cannot compromise your professional judgement as a result of a personal

relationship. See sections 150.1, 100.12.

2. Case study two: withholding information

You are a CIMA member who is a non-executive director of a large services company. The board of
directors meets on a monthly basis to discuss the quarterly forecast and other business issues.
It is the responsibility of the finance director to distribute papers at least two weeks prior to the date
of the meeting. These papers should first be signed off by the CEO. Recently documents have only been
received a day before the meeting. You have raised this with the finance director who has stated the delay
is due to the sign-off by the CEO. You do not feel that you are given sufficient time to review the papers,
and also believe the information that is available is not complete and therefore difficult to fully appraise.
The CEO is a very dominant character and many members of the board are nervous about broaching the
matter.
What would you do?
Integrity

You need to uphold your integrity by addressing the matter there is a need
to be straightforward and honest. See section110.

Objectivity

Your objectivity is being compromised not only on the basis of lack of full and
timely information, but also the perceived threats of the CEOs behavior. See
sections 300.12 -300.15.

Professional
competence and due
care

You need to have full and correct information in a timely manner in order to
carry out your role. See secton 330.2.

Confidentiality

You would be expected to resolve the issues internally where possible without
disclosing confidential information. See section 140.1.

Professional behaviour

Your professional behavior is compromised without addressing the issue and

you would not be discharging your duties (and nor would your colleagues).
See section 320.2.

Ethical dilemmas: what would you do?

3. Case study three: possible insolvency

As financial controller at a manufacturing company you have been advised by a colleague that the sales
director is unlawfully declaring fuel benefits as the tax value is high. This has been creating higher profit
margins and if declared those margins will go down. There is potential that this could push the company
into insolvency, which would result in job losses for 300 employees. You have made the other directors
aware of the situation but they have expressed a wish not to disclose the misleading tax bill.
You are aware that by declaring this information to the tax authorities, as required by law, that the
organisation may have to declare insolvency and those 300 employees could lose their jobs.
What would you do?
Integrity

By not declaring the unlawful tax benefits your integrity is clearly

compromised. See section 110.2

Objectivity

Your objectivity is threatened by the perceived threat of job losses. The

shortterm and unlawful actions to increase margins will not help the
business model in the longer term. See sections 300.12-300.15.

Professional
competence and due
care

By not declaring you are undermining both your professional competence as

well as not acting with due care and diligence as a professional accountant.
See sections 130.1-130.2 and 100.16.

Confidentiality

In this case there is a legal and professional right and a duty to disclose. The
issue will not go away and you will be seen as complicit. See section 140.7.

Professional behaviour

There is a need to comply with the relevant law and regulations on this
matter. By failing to declare your actions both discredit the profession and
put you in disrepute. See sections 300.2, 300.6. 310.2 and 200.10.

4. Case study four: family issues

You are a CIMA student employed as a company secretary for a small family owned limited company. The
board is made up of family members, with only one family member holding an executive position as MD.
There are some disagreements within the family regarding the will of the recently deceased chair of the
board, the mother of the family. The board have twice voted to pay pension contributions to one of the
members of the family on the board as non-executive director, a brother of the MD, and this has been
approved by majority in meeting. However, you have since been advised by the MD not to make the
payment.
What would you do?
Integrity

You need to remain straightforward and honest with both the MD and the
Board. See section 110.1.

Objectivity

You cannot allow the undue influence of family issues to override your
professional judgment. See sections 120.1-120.2 and 100.12.

Professional
competence and due
care

There is a need to act diligently in accordance with professional standards the decision has been approved by the board. See sections 150.1 and 100.16100.22.

Confidentiality

You will not compromise confidentiality by further raising issue with the
board. See section 140.

Professional behaviour

Failure to care out the boards actions may mean failure to comply with
relevant company regulation, against your professional duty. See section
150.1; 300.12-300.15 and 310.1.

Ethical dilemmas: what would you do?

5. Case study five: employee issues

You are a CIMA member who has recently joined a limited company that processes food. The company
is effectively run by one director. The other directors are non-executive and all have close personal
relationships.
As a key member of the finance team you have discovered that some employees are being paid cash
in hand and not via the formal payroll. You also have suspicions that some of these people are being
employed illegally and you have no records of their formal employment documents or contracts.
What would you do?
Integrity

The situation demands that you are honest and straightforward with your
concerns with the management. See section 110.2.

Objectivity

Your objectivity could be compromised if you are unable to obtain the full
facts. See sections 120, 310.

Professional
competence and due
care

You will be required to act competently and diligently in relation to relevant

legislation and professional standards. Sections 130 and 320.3-320.6.

Confidentiality

If you are unable to resolve the issue internally you may need to consult
externally, particularly if legal requirements are being breached. See sections
140.7-140.8.

Professional
behaviour

You will need to bring to the attention of the management the risks and
also the need to act within the law and fairly with employees. See sections
150.1 and 310.2 to 310.3.

Ethical dilemmas: what would you do?