Ethics and Governance (Research Paper Sample)

ETHICS AND GOVERNANCE
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Introduction
The professional accounting bodies based in Australia and their codes of ethics on the mission enshrined on the international federation of accountants (IFAC). The duty set by the body stipulated that it should take the public interest while continuing to strengthen accountancy worldwide. It also enhances adherences to quality professional standards geared to advance of economics international. In doing so, it makes extent in the worldwide convergence of such speaking and standards of interest of the public where accountancy is a pre-requisite on the side of work. The Australian board in collaboration with IFAC has established its own authority with pronouncements for professional accountants and high quality ethical standards. The code of ethics for professional accountants entails establishment of ethical requirements that are necessary for maintaining of discipline and integrity in the accountancy industry. All professional accountants should be aware of the code of ethics under IFAC and the differences that might exist across states and countries (Thakur 1997). Either way they should comply with the more stringent guidance and requirements unless prohibited by regulation or law.
Fundamental Principles
The code of ethics has three parts; the first part is the fundamental principles of professional ethics for professional accountants, which elaborate the framework necessary for application of the principles. It also elaborates responsibility and acceptance of the code about satisfaction of the employer or individual client need. The fundamental principles as exhibited in its framework provide ethical principles and guidance that are required to provide and identify threats within the discipline . This framework enables the accountants to classify the threats and to apply safeguards, hence, eliminating them. In case they are insignificant the principles lows them to reduce the threats into levels that are manageable and in compliance with the fundamental principles.
The five principles as enshrined in the code of ethics are:
Integrity
Integrity entails honesty and straightforwardness of a professional accountant in any business relationships or other professional undertakings hence maintaining the standard of the accountancy industry (Drejer 2002).
Objectivity
This is the second fundamental principle of the Code of Ethics of Professional Accounting Bodies in Australia. There is no professional accountant within the country and the body that should have conflict of interest or having any undue influence over others within an institution or an organization that might override professionalism and business judgments.
Due Care and Professional Competence
Competency in the accountancy field is a prerequisite in accountants has a continuing duty to maintain professional knowledge and skills at the level required by the law in order for client to get satisfy. Client and employee should receive professional services that exhibits competency based on legislation, current development practice and techniques as stipulated be the codes of ethics. It is the work of every accountant to act steady and in accordance with standards of the profession that they occupy and applicable technical services. This principle imposes various obligations on professional accountants, which includes maintaining professional knowledge and skills that are required to ensure employers attain and maintain professional competency. To maintain competency regime, professional accountants requires awareness and understanding of appropriate development and technical professionalism. From the excerpt, the development will preserve capabilities, which will enable professional accountants to deliver diligently and within the professional environments.
Confidentiality
At all cost, all accountants should adhere to the norm of confidentiality about information acquired during business relationship or professional undertakings. Accountants should not disclose any information to third parties without specific and proper authority unless there is professional right or legal duty to disclose. Any information acquired by the accountants should not be used for personal advantages while in their line of duty (Carroll & Gannon 1997). Importance of complying with the principle of confidentiality should continue even after termination of employment or contract. When a professional accountant ends a relationship with employer or client and acquires a new one the accountant is allowed to use prior knowledge according to the code of ethics in complying with the need of confidentiality. They should not disclose at whatsoever circumstances any confidential information that had been earlier received or acquired because of business relationship or professional (Hogget et al, 2011).
Professional Behavior
Professional behavior is the final code of ethics according to the body. Accountants should comply with various regulations and relevant laws hence avoiding any action that might discredit the integrity of the profession (Segal 1999).
Threats to Fundamental Principles of the Code of Ethics
Threats specification to the compliance may arise depending on a situation in which the accountants may be operating and may comprise the fundamental principles. It is hard to specify and define every situation that can cause such situation, hence, hard to look for appropriate mitigating action. The nature of assignments work and engagements may differ, thus, the need of different application to uphold the threats. In respect to threats, conceptual framework should be set after recognizing the threats.
Threats can be categorized as follows:
1 Self-interest threats, these are threats that arise because of other interest of professional accountant, financial or immediate friends, or family member.
2 Self-review threats, they are threats that may occur when a previous decision in respect to specific judgment requires re-evaluation by the concerned accountant professional who undertook the question task.
3 Advocacy threats are exhibited when subsequent impartiality is compromised because of professional accountant sponsoring a specific opinion or position.
4 Familiarity threats occur when the situation of a professional accountant becomes sympathetic to interests of others due to close affiliations or relationship.
5 Intimidation threats, which is the last threat that may occur when it perceive or real threats to a professional accountant. It is a part that someone has been argues as a result of scandal concerning financial crisis.
Concept of Safeguards
The concept of safeguards assist professional accountant to reduce or eliminate threats to manageable and acceptable levels as according to the codes of ethics and fundamental principles. The acceptable levels fall into two broad categories:
* Safeguards in the work environment
* Safeguards that are created by legislation, profession, and regulation
The Safeguarding that legislation is created and therefore, profession and regulation include: corporate governance regulations, continuing professional development requirements, educational, experience, training requirements for entry into the profession, regulatory monitoring and professional standards. Safeguard legislation in this category is the external review through legally empowered third communication party, returns and reports.
Under the code of ethics and fundamentals principles, certain safeguards may lead to the likelihood of deterring or identifying unethical behavior (Nixon 2012). This will lead to creation of well-publicized, effective complaints system that can be operated within the employing organization. The regulator or profession enables colleagues, members and employers of the public to draw attention to unethical or unprofessional behavior. The nature of safeguard to be applied will vary depending on the explicit and stated duty in respect to ethical requirements. Professional accountant in exercising professional judgment should take into consideration what an informed and reasonable third party have in mind. This includes relevant knowledge and information that has significance to the threat and the safeguard mechanisms that should be applied.
COCA -COLA case
* The stake holders
1 COCA- COLA company
2 Shanghai Shenmei and Food company
3 Government of China
4 The E...