Overview
Friday, 22 March 2024 17:11
- Code of ethics: a set of rules that explains what behaviours are generally accepted as right and wrong.
Each business has its own.
- Ethical behaviour: acting in a way that is generally accepted as being right
- This applies for everyone in the business. Sometimes some difficult decisions need to be made to
achieve the highest profit while being ethical.
- Good ethical behaviour gains good reputation
1. Principles of ethics
- Leadership
- Discipline
- Transparency
- Accountability
- Fairness
- Sustainability
- Responsible management
Professional bodies
- An organisation with a specific profession
Professional bodies Profession
South African Institute of Charted Accountants (SAICA) Charted accountants CA (SA)
South African Institute of Professional Accountants (SAIPA) Professional accountants
Independent Regulatory Board for Auditors (IRBA) Registered auditor (RA)
Institute of Certified Bookkeepers(ICB) Certified Bookkeeper
Charted Institute of Management Accountants (CIMA) Management Accountant (ACMA)
Institute of Internal Auditors South Africa (IIA SA) Internal Auditor (CIA)
1. Role of professional bodies
- Represent, promote and protect the profession they represent
- Principles:
○ Integrity (honesty)
○ Objectivity (Not biased)
○ Professional competence and due care (act professional and know what's required of them)
○ Confidentiality (Not share confidential information)
○ Professional behaviour (obey laws and regulations)
2. Roles of SAICA AND SAIPA
- Set standards: specific training and qualifications required
- Best practices: informs members of latest best practices
- Promoting the profession: promote the profession so the public respects it
- Public issues: speak on behalf of all professionals and address issues in their field
- Code of professional conduct: writing and updating the code, ensuring members follow rules and taking
action when rules aren't followed
3. Disciplinary and punitive measures
Breaching the code of professional conduct could lead to punishment or disciplinary action
- Not too serious: member cautioned (reprimanded) or pays fine
- Serious: suspension (disqualified) from being member
Ethics Page 1
King report
- A document that sets out policies and principles on professional conduct
- Shows rules and processes to manage a business
- Its referred to as King IV
- Al registered companies must comply with King IV
Principles
- Ethical leadership and corporate citizenship
○ Directors, boards and committees should lead by example
○ Presence of ethical culture at a company
○ Decisions should take economic, social and environmental resources
- Boards of directors
○ Must fulfil their roles according to King IV
- Integrated reporting
○ Disclose information on the impact on Planet, People & Profits
- Risk governance
○ Manage and control company risks
- Stakeholder relationships
○ Shareholders treated fairly and communication is transparent
- Internal audit
○ Effective internal audit present
○ They look at how effective the internal controls are and all the risks the company
faces
- Compliance
○ Comply with laws, rules, standards and codes
- Independent auditor
○ Effective audit committee should be present.
○ Must appoint independent auditor.
○ The auditor must provide an opinion on the accuracy of the financial statements
Legislation governing companies
- Registered companies should adhere to The Companies act (no. 71 of 2008)
Principles
- Responsibilities of directors
○ Act on behalf of the shareholders
○ Manage the company
○ Make decisions that benefit the shareholders
- Conflicts of interest
○ Directors make decisions that will benefit the company not themselves
○ No conflicts of interest
○ Conflicts of interest: occur when a person acts for their benefit
- Directors performance evaluation
○ Directors performance should be evaluated reach year
○ Evaluations need to be objective
○ Point out if any training is needed for directors to improve their decision making
- Directors remuneration
○ Shareholders need to approve how much remuneration is paid to directors
○ Remuneration need to be included in the financial statements
○ Directors need to get fair compensation for their work
- Dispute resolution
○ A company should follow the business rescue proceedings shown in the Companies Act when company is
on the verge of bankruptcy
○ The Act provides detailed information to guide a company in financial distress
Ethics Page 2
