Ethics Slides

Fundamental Principles
Topic Outcomes
• Recap on the Fundamental Principles
• Conceptual Framework and Application
 Professional
accountants in public
practice
Professional Ethics Module
Introduction
• A professional accountant shall comply with the fundamental to
identify, evaluate and address threats to compliance with the
fundamental principles.
• When dealing with an ethics issue, the professional accountant shall
consider the context in which the issue has arisen or might arise
Identifying threats
Self-interest threats
• A professional accountant having a direct financial interest in a client.
• A professional accountant quoting a low fee to obtain a new engagement and
the fee is very low that it might be difficult to perform the professional service in
accordance with applicable technical and professional standards for that price.
• A professional accountant having a close business relationship with a client.
• A professional accountant having access to confidential information that might
be used for personal gain.
• A professional accountant discovering a significant error when evaluating the
results of a previous professional service performed by a member of the
accountant’s firm.
Identifying threats
Self-review threats
• A professional accountant issuing an assurance report on the effectiveness of
the operation of financial systems after implementing the systems.
• A professional accountant having prepared the original data used to generate
records that are the subject matter of the assurance engagement.
Advocacy threats
• A professional accountant promoting the interests of, or shares in, a client.
• A professional accountant acting as an advocate on behalf of a client in
litigation or disputes with third parties.
• A professional accountant lobbying in favour of legislation on behalf of a client.
Identifying threats
Familiarity threats
• A professional accountant having a close or immediate family
member who is a director or officer of the client.
• A director or officer of the client, or an employee in a position to exert
significant influence over the subject matter of the engagement,
having recently served as the engagement partner.
• An audit team member having a long association with the audit client
Identifying threats
Intimidation threats
• A professional accountant being threatened with dismissal from a client
engagement or the firm because of a disagreement about a professional
matter.
• A professional accountant feeling pressured to agree with the judgment of
a client because the client has more expertise on the matter in question.
• A professional accountant being informed that a planned promotion will
not occur unless the professional accountant agrees with an inappropriate
accounting treatment.
• A professional accountant having accepted a significant gift from a client
and being threatened that acceptance of this gift will be made public
Evaluating threats
The conditions, policies and procedures might impact the evaluation of
whether a threat to compliance with the fundamental principles is at
an acceptable level. Such conditions, policies and procedures might
relate to:
• The client and its operating environment; and
• The firm and its operating environment.
The professional accountant’s evaluation of the level of a threat is also
impacted by the nature and scope of the professional service.
The Client and its operating environment
The professional accountant’s evaluation of the level of a threat might
be impacted by whether the client is:
• An audit client and whether the audit client is a public interest entity;
• An assurance client that is not an audit client; or
• A non-assurance client
The firm and its operating environment
A professional accountant’s evaluation of the level of a threat might be impacted by the work
environment within the accountant’s firm and its operating environment.
For example:
• Leadership of the firm that promotes compliance with the fundamental principles and establishes the
expectation that assurance team members will act in the public interest.
• Policies or procedures for establishing and monitoring compliance with the fundamental principles by
all personnel.
• Compensation, performance appraisal and disciplinary policies and procedures that promote
compliance with the fundamental principles.
• Management of the reliance on revenue received from a single client.
• The engagement partner having authority within the firm for decisions concerning compliance with
the fundamental principles, including decisions about accepting or providing services to a client.
• Educational, training and experience requirements.
• Processes to facilitate and address internal and external concerns or complaints.
Addressing threats: Examples of safeguards
Safeguards vary depending on the facts and circumstances. Examples of actions that in certain
circumstances might be safeguards to address threats include:
• Assigning additional time and qualified personnel to required tasks when an engagement has been
accepted might address a self-interest threat.
• Having an appropriate reviewer who was not a member of the team review the work performed or
advise as necessary might address a self-review threat.
• Using different partners and engagement teams with separate reporting lines for the provision of non-
assurance services to an assurance client might address self-review, advocacy or familiarity threats.
• Involving another firm to perform or re-perform part of the engagement might address self-interest,
self-review, advocacy, familiarity or intimidation threats.
• Disclosing to clients any referral fees or commission arrangements received for recommending services
or products might address a self-interest threat.
• Separating teams when dealing with matters of a confidential nature might address a self-interest
threat.
Communicating with those charged with
governance
a professional accountant shall determine the appropriate individual(s)
within the entity's governance structure with whom to communicate. If
the professional accountant communicates with a subgroup of those
charged with governance, he/she shall determine whether
communication with all of those charged with governance is also
necessary so that they are adequately informed.
In determining with whom to communicate, a professional accountant
might consider:
• The nature and importance of the circumstances; and
• The matter to be communicated.
QUESTIONS
The role of Professional
Accountants in fighting
corruption

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 1. Topic Objectives

a) Define what is corruption and discuss it in the Zimbabwean context

b) Discuss the framework for fighting corruption in Zimbabwe

c) Discuss the role of the Professional Accountant in fighting corruption

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 2. Introduction
a) Professional Accountants are better positioned to fight corruption in
Zimbabwe given their role in any organisation.
b) Accountants by the very nature of the profession are primarily responsible
for the recording, presenting, analyzing, interpreting and communicating
financial information of both private and public entities to users of financial
statements.
c) Accountants are expected to monitor financial inflows and outflows, report
financial irregularities, advise management on financial operations of their
organizations and where it is necessary under obligation of the law,
report financial impropriety to anti-graft authorities.
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 3. Corruption

a) Corruption has been identified as the greatest enemy to the

development and progress of any nation.

b) Corruption has been responsible for the political instability of the

governments in recent years.

c) Corruption invariably strangles the system of social organization.

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 4. The concept of corruption
In simple terms, corruption can be defined as misusing official privileges for private
gain to the detriment of the public or stakeholders to whom such official owe fiducial
responsibility.
Corruption covers such acts as:
a) Use of one’s office for pecuniary advantages.
b) Gratification.
c) Influence peddling.
d) Insincerity in advice with the aim of gaining advantages.
e) Less than a full day work for a full day’s pay.
f) Tardiness and slovenliness.
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5. Zimbabwe Prevention of Corruption Act (Chapter 9:16)

• Corrupt practices as follows:

If—
(a) any agent corruptly solicits or accepts or obtains, or agrees to accept or
attempts to obtain, from any person a gift or consideration for himself or any other
person as an inducement or reward—
i. for doing or not doing, or for having done or not done, any act in relation to his
principal’s affairs or business; or

ii. for showing or not showing, or for having shown or not shown, favour or disfavour
to any person or thing in relation to his principal’s affairs or business;
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 5. Zimbabwe Prevention of Corruption Act (Chapter
9:16)
(b) or any person corruptly gives or agrees to give or offers
any gift or consideration to any agent for himself or any other
person as an inducement or reward—
i. for doing or not doing, or for having done or not done, any act in
relation to his principal’s affairs or business; or

ii. for showing or not showing, or for having shown or not shown,
favour or disfavour to any person or thing in relation to his
principal’s affairs or business; 21
5. Zimbabwe Prevention of Corruption Act (Chapter 9:16)

(c) or any—
i. agent, with intent to deceive his principal, uses; or

ii. person, with intent to deceive the agent’s principal, gives to an

agent;

iii. any receipt, account or other record in respect of which the

principal is interested and which contains a statement that is
false or erroneous or defective in a material particular; or 22
5. Zimbabwe Prevention of Corruption Act (Chapter 9:16)

(d) any agent, by arrangement with any seller of goods or with any
person engaging to render any services, secretly obtains any gift or
consideration for himself or for any other person in connection with his
principal’s affairs or business; or
(e) any seller of goods, or any person offering his services, secretly
offers any gift or consideration to an agent for himself or for any other
person in regard to the sale of the goods or to the employment of his
services in connection with the affairs or business of the agent’s principal;
or
( f ) any agent, with intent to deceive his principal or to obtain any gift
or consideration for himself or any other person, fails to disclose to his
principal the full nature of any transaction carried out in connection with
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his principal’s affairs or business;”

6. Fighting corruption in Zimbabwe: Zimbabwe
Anti-Corruption Commission (ZACC)
In 2004, Zimbabwe set up ZACC with the promulgation of the Zimbabwe Anti-Corruption Commission Act (Chapter
9:22). The role of ZACC is outlined in the Act:
(1) The Zimbabwe Anti-Corruption Commission has the following functions—
a) to investigate and expose cases of corruption in the public and private sectors;
b) to combat corruption theft, misappropriation, abuse of power and other improper conduct in the public and private sectors;
c) to promote honesty, financial discipline and transparency in the public and private sectors;
d) to receive and consider complaints from the public and to take such action in regard to the complaints as it considers
appropriate;
e) to direct the Commissioner-General of Police to investigate cases of suspected corruption and to report to the Commission
on the results of any such investigation;
f) to refer matters to the National Prosecuting Authority for prosecution;
g) to require assistance from members of the Police Service and other investigative agencies of the State; and
h) to make recommendations to the Government and other persons on measures to enhance integrity and
accountability and prevent improper conduct in the public and private sectors.”.

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6. Fighting corruption in Zimbabwe: Zimbabwe
Anti-Corruption Commission (ZACC)
• Anti-corruption efforts in Zimbabwe are governed by the following legislation:
a) The Prevention of Corruption Act (1983);
b) Public Service Act (1995);
c) The Ombudsperson Amendment Act (1997);
d) Anti-Corruption Commission Bill (2004);
e) The Criminal law (Codification and Reform) Act (2004);
f) Bank Use Promotion and Suppression of Money Laundering Act (2004);
g) Criminal Procedure and Evidence Amendment Act (2004); and
h) Criminal Law (Codification and Reform) Act of 2006
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6. Fighting corruption in Zimbabwe: Zimbabwe
Anti-Corruption Commission (ZACC)
• Here is a list of reported corruption scandals in Zimbabwe since 1980:
• 1987 – Zisco Steel blast Furnace Scandal
• 1987 – Air Zimbabwe Fokker Plane Scandal – $ 100 million
• 1986 – National Railways Housing Scandal
• 1988 – Willowgate Scandal
• 1989 – ZRP Santana Scandal
• 1994 – War Victims Compensation Scandal
• 1995 – GMB Grain Scandal
• 1996 – VIP Housing Scandal
• 1998 – Boka Banking Scandal
• 1998 – ZESA YTL Soltran Scandal
• 1998 – Telecel Scandal
• 1998 – Harare City Council Refuse Tender Scandal
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6. Fighting corruption in Zimbabwe: Zimbabwe
Anti-Corruption Commission (ZACC)
• 1999 – Housing Loan Scandal
• 1999 – NocZim Scandal
• 1999 – DRC timber and diamond Un reported scandals
• 1999 – GMB Scandal
• 1999 – Ministry of water and rural development Chinese tender scandal
• 1999 – VIP Land Grab Scandal
• 2001 – Harare Airport Scandal
• 2008-2014 - Airport Road Scandal
• 2016 - Mnangagwa Command Agriculture Scandal
• 2018 -Zesa scam Involving Samuel Undenge’s criminal abuse of office

• Students should research further on these cases.

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 7. Discussion
a) By giving examples, discuss the extent to which the
Zimbabwe Anti-Corruption Commission has been successful
in their role to fight corruption in Zimbabwe.

b) What do you think should be done to improve the

effectiveness of the Anti-Corruption Commission?

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 8. Zimbabwe corruption ranking
a) Transparency International, which is a corruption watchdog
internationally, runs the Corruption Perceptions Index, which has
become the leading global indicator of public sector corruption. The
index offers an annual snapshot of the relative degree of corruption
by ranking countries and territories from all over the globe.
b) In 2019 in the corruption index, Zimbabwe scored 24/100 and was
ranked 158 out of 180 countries surveyed.
c) Research more about this index on
https://www.transparency.org/en/countries/zimbabwe#
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 9. Types of corruption
For the purpose of this course, corruption will be viewed from
three perspectives. These include:

a) Administrative corruption

b) Electoral corruption

c) Financial corruption
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 9a. Administrative Corruption
i. Administrative corruption involves public administration where officials
misuse resources for personal enrichment.
ii. The wealth of the country has been withered with little or none to show
in the living condition of an average Zimbabwean.
iii. Tax administration as one aspect of this type of corruption lacks
transparency that has led either to higher levels of tax evasion or tax
officials demanding for bribes in return for lower tax rates.
iv. Administrative corruption also occurs when one obtains business
from the public sector through inappropriate procurements.
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 9b. Electoral corruption
i. Electoral corruption includes buying of electoral votes, interference with
electoral process, intimidation of the electorates and rigging elections.
ii. Examples of this type of corruption are when losers become winners and
when votes are bought against the will of the electorates.
iii. Most times this may lead to killing and maiming of the electorates and
party candidates.
iv. Officers involved in this type of corruption do engage in the sales of
legislative votes, perverse judicial decisions in election court cases and
sacrifice public interest and welfare for personal gains.
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 9c. Financial corruption
i. Financial corruption includes diversion, mismanagement and
misappropriation of funds, embezzlement, theft from public funds, and
abuse of public power for extortion or bribe.
ii. Financial corruption refers to bribery, illegal and greedy acquisition of
public funds into private use which otherwise would have been invested
for public goods.
iii. Stolen wealth by some public officers from various sources of financial
corruption which cannot be legitimately explained as earnings are
siphoned and hidden across border to foreign banks especially in the
developed countries which are often regarded as safe heaven.
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 10. Causes of corruption
Excessive requirements, greed, inequality in distribution of wealth, poverty and poor governance are the
causes of corruption in the third world countries.
• The following are some of the causes of corruption in Zimbabwe:
a) Weak government institutions
b) Poor pay incentives
c) Lack of openness and transparency in public service
d) Absence of key anti-corruption tools
e) Ineffective political process
f) Culture and acceptance of corruption by the populace
g) Absence of effective political financing
h) Poverty
i) Ethnic and religious difference
j) Resource scramble
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 11. The consequences of corruption on
national development
• Corruption usually has negative consequences on the socio-political and
economic development of any nation. Basic consequences of corruption to
any nation include but not limited to the following:
a) Hampers economic growth by deterring investments (both local and foreign direct
investments).
b) Reduces spending on social cost (e.g. education, health and security).
c) Leads to poor state of infrastructural development (e.g. bad roads, inadequate
provision of electricity supply).
d) Leads to reduction in the quality of goods and services available to the public (i.e.
some companies do cut corners to increase profit margins).
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 12. The role of Professional Accountants
in fighting corruption
a) Promote professional ethics and code of conducts.
b) Create climate for transparency.
c) Provide reliable information in both public and private sectors.
d) Disassociate from illegal activities.
e) Establish mechanisms that prevent and detect flaws in place of work.
f) Conduct checks on the internal control system to enhance compliance with relevant laws
and regulations.
g) Improve financial accountability and probity by strong supervision.
h) Promote integrity, trust and fairness as guiding principle.
i) Create climate for good corporate governance.
j) Exhibit honesty and making valuable effort towards eradicating corruption in
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 12. The role of Professional Accountants
in fighting corruption
• To sustain the fight against corruption by Professional Accountants, the following
recommendations are necessary:
a) Government and the National Assembly should enact a piece of legislation (an act) that will protect and
reward professional accountants and individuals that may expose any form of corruption at the cause of their
duties.
b) The accounting professional bodies should set up corporate supervision units that will monitor, communicate
and receive feedback from employers of labour where members of the institute are gainfully employed.
c) Corporate organizations should ensure that effective corporate governance process and supervision
mechanisms are in place.
d) The enforcement of powerful watch on corporate activities should be encouraged by the Government
and stakeholders in business.
e) The use of transparent financial accounting information should be encouraged.
f) The Public Accountants and Auditors Board (PAAB) should ensure that business entities operating in
Zimbabwe must comply with the International Financial Reporting Standards (IFRS).
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 13. Discussion
a) Discuss the assertion that, “There is no financial corruption
that can happen in an organisation without the cooperation
of the professional accountants.”

b) Discuss the role that professional accountants can play in

fighting corruption in public sector organisation.

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QUESTIONS