Should you go there? ‘Shades of Grey’ ethics case study
ICAS has updated its ‘Shades of Grey’ ethical dilemma case studies publication. This latest edition refreshes the original ‘Shades of Grey’, published in 2009, and features 19 case studies including a number of new scenarios.
The dilemmas are intended to cover a wide range of situations that might be faced by chartered accountants in business or in practice. Each scenario is focused on you and at the end of each scenario the requirement is for you to make a decision and do something.
In the following case study extracted from the publication, you are a partner in a firm, delighted to have recently won a contract related to a new overseas client’s IT, but then you discover the IT may be capable of being used by the client for questionable purposes.
Should you go there?
You are in the middle of your first year as a partner in the accounting firm which specialises in IT related work. You had been brought in as a partner, having trained with another firm, and you still feel you have something to prove to the more experienced partners who have worked in the firm for far longer than you.
Through contacts, you bid for, and win, a contract to work with the health ministry of an overseas country which is a key ally of the UK, but which is not a democracy and has been the subject of allegations.
You are delighted at this substantial win and the possible follow-on opportunities. The Senior Partner congratulates you when you bump into each other in the office the day after you’d heard the good news.
You are sitting in your office still feeling quite happy with yourself when two of your firm’s key members of staff walk in. You have worked well with them both before on other projects, and you respect their opinions. Unfortunately, however, you can see from the look on their faces that they are not happy.
They say that they will not work on the contract because the technology, which will be used to monitor health, could also be used for general population surveillance.
You had bid for this contract on the basis that your product would be used to monitor health. You hadn’t considered that it had the capability to be used for other purposes. Your Senior Partners had been so keen for you to win this contract and, in your enthusiasm to impress them, you realise you may not have given full consideration to your firm’s involvement with a questionable government, and possibly made an error of judgement. You get a sinking feeling in your stomach.
What do you do now?
What are the readily-identifiable ethical issues for your decision?
For you personally
The ICAS Code of Ethics states the following in relation to the fundamental ethics principle of Integrity:
“111.1 A1 Integrity involves fair dealing, truthfulness and having the strength of character to act appropriately, even when facing pressure to do otherwise or when doing so might create potential adverse personal or organisational consequences.
Fair dealing includes respecting values of equality, diversity and inclusion.
111.1 A2 Acting appropriately involves:
(a) Standing one’s ground when confronted by dilemmas and difficult situations; or
(b) Challenging others as and when circumstances warrant,
in a manner appropriate to the circumstances.”
The fundamental ethics principle of Professional behaviour states:
“R115.1 A professional accountant shall comply with the principle of professional behaviour, which requires an accountant to:
(a) Comply with relevant laws and regulations;
(b) Behave in a manner consistent with the profession’s responsibility to act in the public interest in all professional activities and business relationships; and
(c) Avoid any conduct that the accountant knows or should know might discredit the profession.”
You should have performed due diligence on the capabilities of the IT system before agreeing to pursue the appointment.
Were the more senior partners aware that the technology could be used for general population surveillance but kept quiet because they wanted to win the client?
There are no legal reasons you cannot do this work, but should you? Can you engage with a client if you have concerns that they might use your product inappropriately? Can you engage with a client if you suspect that your product might be used for illegal purposes? How can you say now that you do not want to engage with the client?
Can you do anything to monitor the software to restrict its use?
How will this impact your personal reputation?
While you have won the tender, have you actually contracted yet? Is there potential to withdraw - what would the implications be for your reputation if you did this? Will they be worse if you proceed?
Your Senior Partners may be happy with you in the short-term if you continue to go ahead with the engagement, but if it turns out your staff members are correct and you ignored their concerns, your reputation could be irreparably damaged in the long-term. Monitoring would not be illegal in the overseas country as it’s not a democracy but you know if the press get hold of the story there will be a huge amount of adverse publicity for your firm.
Is there someone within your firm with whom you can discuss the issue - another partner or the Ethics Partner?
Organisations need their people to speak up if they have concerns, to ensure that issues are dealt with at the earliest opportunity before they escalate, but people need to feel comfortable that they will be supported, and that they will not suffer any detriment by speaking up. It can often be difficult for people to speak up – it takes courage. Regardless of your concerns around how you will resolve this matter, you have a responsibility to your staff to show your appreciation to them for raising their concerns. You need to listen to them, to investigate their concerns promptly and then provide feedback on how the matter has been addressed. If people feel that speaking up would be futile, they will not put themselves at risk by reporting. You need to ensure that there will be no retaliation against your staff for speaking up - negative consequences on their career or their remuneration.
For the firm
Do the culture and leadership of the firm emphasise the importance of ethical behaviour and the expectation that everyone will act ethically? Is there a supportive environment to encourage open discussion of ethical dilemmas without a recriminatory, or blame, culture? Do employees feel safe and able to trust in the authenticity of the speak up mechanism? Does the firm listen to its employees when they speak up and then act on what has been heard by investigating the issue?
Has the potential reputational damage to the firm been considered if your IT is used for unethical purposes by your client? If you provide a government with the IT capabilities to use surveillance on their population, even if your legal contract says otherwise, can you be implicated in the unethical behaviour? Should you withdraw from the engagement now rather than wait until your firm is implicated in a scandal at a later date?
Who are the key parties who can influence, or will be affected by, your decision?
You; your fellow partners; your employees; the client; and the UK government.
What fundamental ethical principles for accountants are most applicable and is there an apparent conflict between them?
There is a need for you to determine the capabilities of the technology and whether the output from the technology can only be used for the purpose intended in your contract.
You may have to admit to having made an error of judgement by not carrying out this due diligence before seeking the contract. There is a need to display ethical leadership and moral courage by getting to the bottom of the matter even when doing so might now create adverse personal consequences.
The ability for your judgement not to be influenced by your relationship with the other partners, by concerns over the personal embarrassment, or loss of your employment.
Professional competence and due care
You need to take into consideration your responsibilities to the public interest.
If you do nothing, you could be deemed complicit in this activity as well as being viewed as condoning your firm’s IT systems being used by a government to monitor their population.
There is a need to avoid any conduct that you know might discredit your own reputation, your firm’s reputation, and also that of the profession.
Is there any further information (including legal obligations) or discussion that might be relevant?
You know the importance of speak up mechanisms in organisations, allowing issues to be dealt with at the earliest opportunity before they escalate. You understand it must have been difficult for your staff to speak up about their concerns and that there is therefore a need for you to listen to them, and to investigate and get a better understanding of the capabilities of the IT and the output from it, so that such concerns continue to be raised by employees in the future.
The possibility still exists that your staff are mistaken, but you do need to get to the bottom of it.
Is there a conflict between the guardian and commercial strands of an accountant’s responsibilities?
The commercial interests of the firm might be served by engaging with this client as the fees for the work, and potential fees from additional work, could be lucrative however, if your firm is providing a product to a government which could potentially misuse it against its population, this does not equate with the accountant’s guardian role, legal obligations and the moral obligation to act in the public interest. Even if it turns out the IT could not be used inappropriately by the overseas government, reputationally, does your firm want to be involved with such a client?
What lessons do you need to draw about who you/your firm works with? What effect does the reputation of your clients have on you?
Based on the information available, is there scope for an imaginative solution?
Are there any other comments?
In deciding on a course of action, you should apply the reasonable and informed third party test in the ICAS Code of Ethics and consider if a reasonable and informed third party would likely conclude that your actions were appropriate. Conduct that might discredit the profession includes conduct that a reasonable and informed third party would be likely to conclude adversely affects the good reputation of the profession.
Documentation is encouraged so that there is a record of the issue, the details of any discussions, and the matters taken into consideration in reaching your judgement and action.
ICAS Ethics Resources
Find out more about the ethics resources ICAS provides to support its members.