IMA's updated guidance tells accountants to be ethical

In an era where accounting complexity mushrooms, the Institute of Management Accountants saw a need to issue new guidance that gets back to basics when it comes to how accountants should behave. Be ethical, the new statement says.

The IMA revised its Statement of Ethical Professional Practice to articulate what some might consider overly obvious. Some are bedrock principles that have always been part of the code, but some are newly inked.

Be professional. Perform duties within the law and technical standards. Keep confidential information confidential. Don’t use confidential information for illegal or unethical purposes. Mitigate conflicts of interest. Be fair and objective in communicating information. Report deficiencies. Don’t ignore unethical situations; instead, seek to resolve them.

“I guess we’ve had enough examples of not only accountants but other management professionals who don’t act ethically in certain situations, so they need reminders and guidance,” said Curt Verschoor, chair emeritus of the IMA’s Committee on Ethics. He’s a regular columnist on ethics in business. “There are enough issues that come up every month, it’s not as if I have to hunt to find things to write about.”

The biggest change to the statement is focused on giving accountants a course of action when they encounter troubling behavior. The statement tells members to work to resolve the issue, to seek guidance through a new help line, and consider consulting an attorney. “If resolutions are not successful, the member may wish to consider disassociating from the organization,” the statement says.

The IMA last updated its code in 2005, in the aftermath of meltdowns like Enron that ushered in the Sarbanes-Oxley Act. Since then, Verschoor notes, the regulatory environment has changed. The Securities and Exchange Commission now pays bounties to whistleblowers, the fraud examination profession has exploded, and globalization has taken off. “We thought enough things had changed that we wanted to update,” he says.

The IMA’s new issued guidance follows research by the ethics committee to study the ethics codes for several professional organizations, including the global ethics standard of the International Ethics Standards Board for Accountants. It also considers whistleblower provisions under Dodd-Frank.

The IMA is not the only accounting group reconsidering its standards of professional behavior. The American Institute of Certified Public Accountants also is revising its guidance to members on how to respond when they encounter instances of noncompliance with laws and regulations. The AICPA proposal closely follows the IESBA code, but provides for some differences given the different legal environment in the United States.

The revision has sparked some debate in the accounting profession, especially around the extent to which accountants should be permitted or expected to spill confidential information if it is deemed in the public interest to do so. The AICPA’s Professional Ethics Executive Committee is still deliberating the issue.