ICAS motto embedded in the Ethics Equation

James Barbour CA, Director of Policy Leadership, discusses how ethical decision‑making relies on what he calls the ‘ethics equation’, combining a commitment to seeking the truth with the moral courage to act on it.

The Ethics Equation 

When asked how to assess an ethical dilemma, I regularly refer to what I term the ‘ethics equation’. There’s no scientific or mathematical validity behind my theory, but it does provide a useful means of making a reasonable judgement in the given facts and circumstances.  

Ethics = Quaere Verum + Moral Courage. 

Quaere Verum

The ICAS motto ‘Quaere Verum’ (Seek the Truth) has most definitely stood the test of time. A key element of any ethical dilemma is ensuring you have the appropriate facts in the given circumstances. I appreciate this isn’t always easy; however, obtaining sufficient and relevant information should always be the goal when forming your professional judgement in the given scenario. 

The IESBA Code of Ethics refers to the need for an ‘inquiring mind’. This means considering the source, relevance and sufficiency of information obtained, and being open and alert to the need for further investigation or other action.  

However, the truth on its own isn’t enough. You then need to decide what you do with it. Every time I refer to this, I’m reminded of the scene from the movie ‘A Few Good Men’, where Jack Nicholson plays a shining role as Colonel Jessop and delivers the immortal line: ‘You can’t handle the truth’. Well, CAs need to be able to handle the truth. 

What you do will depend on the specific facts and circumstances. There may not always be one clear course of action, so it’s up to you to exercise your professional judgement to decide the most appropriate way forward. 

Discussing ethical dilemmas on a confidential basis with a trusted colleague or friend, someone from your professional network, or using our ethics helpline service, can be a useful way to gain additional input. This can highlight alternative courses of action and may bring to light further considerations that you haven't yet identified.

Moral courage

What is clear, however, is that to be able to handle the truth, CAs need to exercise moral courage. They must have the moral courage to act ethically and challenge apparent unethical behaviour. 

Moral courage is included in the ICAS Code of Ethics as an enabler. It recognises that moral courage is a key underpinning qualitative characteristic required of a CA to enable them to comply with the fundamental ethics principles of integrity, objectivity, professional confidence and due care, confidentiality and professional behaviour. The Code states:

“110.2 A0 Moral courage

"In order to ensure compliance with the fundamental principles, an underpinning qualitative characteristic required of the professional accountant is the ‘courage’ to act morally. ‘Courage’ for the professional accountant is the need to act in accordance with the fundamental principles, especially in situations where there is a risk of suffering adverse personal consequences. 

"There is a need for the professional accountant to confront ethical dilemmas with courage. When facing an ethical dilemma, the professional accountant needs to have the courage to acknowledge the dilemma, to make a reasoned judgement as to the ethical action required to resolve the dilemma, and then to act accordingly.”

Every CA needs to protect not only their own reputation, but also that of their organisation and their profession. If others within your organisation aren't behaving ethically, you have an obligation to highlight this and seek to influence and change behaviour going forward. 

No matter your role, whether newly qualified or an experienced Chief Financial Officer, if you suspect impropriety and do nothing, you could find yourself being guilty of condoning it and could be implicated in a potential scandal at a later date. 

The reasonable and informed third party test is key

The last step is having something to measure your decision against. In other words, you need to think about how someone else would view what you plan to do — or not do — in this situation.

This is what the Code of Ethics refers to as ‘the reasonable and informed third party test’. It involves considering whether another person - someone who knows the facts and understands the situation - would likely come to the same conclusion about what the right thing to do is. 

This person looks at all the relevant facts and circumstances that the CA knows - or could reasonably be expected to know - at the time that the conclusion is made. They also have to have the relevant knowledge and experience to understand and evaluate whether the CA’s conclusion is appropriate in an impartial manner. 

Coupled with this, you can also apply the ‘mirror’ test. Can you sleep at night? Is your conscience clear? How would you feel about defending your proposed course of action to a judge, on Newsnight, or before a Parliamentary Committee?

My final thought takes us back to the concept of the ‘inquiring mind’. When applying this, it may be helpful to keep the motto of the superhero character ‘The Shadow’ in mind: "The sun is shining but the ice is slippery." 

Always remain curious; all may seem fine, but exercise caution, as threats are never that far away.