Accounting Basics

Ethics

 Code of Ethics

  • A Code of ethics is a statement of norms and beliefs of the business, describing acceptable behavior in the workplace.
  • It makes it possible for every person involved in the business to know and understand what is considered right and wrong in specific situations.
  • Most codes will value honesty, integrity, and diversity.

 

Basic principles of ethics

2.1 Ethical conduct

  • The word ethics is defined as a set of moral principles of a profession according to which a person should behave.
  • Both employees and employers have a responsibility towards themselves, fellow colleagues, clients, and the profession to act morally and ethically.
  • In any profession, a set of rules should be laid down so that everyone knows what is acceptable.
  • This ethical code of conduct should be drawn up in such a way that subordinates don’t feel that rules are applicable only to them.
  • Both employees and employers should be involved in setting up a code of conduct for a business.

2.2 Leadership

  • Leadership is a position or state of being in control of a group of people or an organization.
  • A leader has to take control and people have to follow.
  • Good leadership is visible when the followers obey the leader because they respect what the leader says and does.

2.3 Discipline

  • Employees must work and behave in a controlled way and this involves obeying specific rules.
  • The Code of ethics describes acceptable behavior in the workplace and consequences for incorrect behavior.
  • Employees who do not follow the Code of ethics will be disciplined.

2.4 Transparency

  • Transparency means that behavior must be such that it is clear that you have nothing to hide.

2.5 Accountability

  • Being accountable means taking responsibility for what you say and do, and being able to justify your actions.

2.6 Fairness

  • Fairness is the quality of being reasonable and just. It means that you judge a situation objectively and without bias or any preconceived ideas. Customers or clients must feel that they are treated fairly.

2.7 Sustainability

  • All businesses need to act in a way that shows respect towards the environment and the use of resources. Sustainability makes a difference in the long term. Businesses should not waste resources or damage the environment.

2.8 Responsible management

Responsible management takes into account three important things, often called the 3Ps:

  • People: A responsible manager considers all the stakeholders of the business – employees, suppliers, and customers – and deals with them in an ethical way.
  • Planet: A responsible manager takes the environment into account and does everything possible to ensure that the environment is looked after and not destroyed.
  • Profit: A responsible manager ensures that the business makes the maximum profit, but only by using ethical practices.

2.9 Integrity

Integrity can be defined as honesty, efficiency, sincerity, honesty towards oneself, the upholding of values and norms. Success in a business can only be achieved when employees and clients respect the integrity of the business and the integrity of the business is reflected in the management and leaders. Why is integrity important for managers?

  • It builds confidence – when people know that managers don’t use their position to enrich themselves through the business, confidence, loyalty, and support will grow.
  • This influences others – the managers conduct influences amongst others the employees and employers. His/her character determines the character of the business.
  • It creates high standards – the manager’s integrity will set a positive example for employees. Remember, people do what people see.

2.10 Confidentiality

Most information in a business should be kept confidential. It is important that employees should not leak information that is intended only for the business to people outside the business. For example, the manager has to make decisions about a large contract that the business might obtain. If this information is disclosed to people outside the business, a rival business might use the information to obtain the contract.

Employees who are disloyal towards the business will share confidential information with people who should not have access to it.

2.11 Objectivity

Objectivity is described as the ability to act in an unbiased way. This means that you should not be influenced by personal feelings and preferences.

An objective person makes decisions based on true facts and not based on his/her personal feelings. An objective person will be fair and unbiased in carrying out his/her duties and will not be influenced by others.

2.12 Professional ability and proper care

When offering professional services, one offers one’s knowledge, skills, experience, care, and diligence. Professional people should not render services for which they are not qualified unless they can obtain advice and assistance. Professional people should maintain a high standard of professional knowledge and skills so that a client and employer have the advantage or qualified professional services in line with the most recent practical, legal and technical developments.

2.13 Professional conduct

This concerns the conduct in the workplace of all the people connected to an enterprise.

At all times a person should conduct himself in such a way that his/her behavior doesn’t have a negative influence on the enterprise. An employee must be polite and show consideration towards all parties with whom he/she has a contact in the enterprise.

2.14 Technical standards

Each employee should have all the relevant technical and professional skills that his/her position requires. All tasks assigned to employees by their employer should be carried out with integrity. These should also conform to all the technical and professional standards that are laid down by the enterprise, the authorities concerned and applicable legislation.