CIMA’s Code of Ethics
The CIMA Code of Ethics is the rulebook. It sets out five fundamental principles every member and registered student must comply with, and — much more importantly for the exam — it gives you a method for dealing with anything that threatens them: identify the threat, evaluate whether it is at an acceptable level, and address it if it is not.
This chapter takes the principles, that three-step conceptual framework, the five categories of threat, the concepts of independence, scepticism, accountability and social responsibility, CIMA's Ethical Checklist for working through a conflict, and the Code's own response to discovering that your employer is breaking the law.
The Code referred to throughout is the CIMA Code of Ethics for Professional Accountants, issued January 2020 — the edition current when these notes were written. It is based on the code issued by IESBA, the International Ethics Standards Board for Accountants, an independent standard-setting board that IFAC supports.
Watch the lecture with this chapter. It is unusually good on this material: it frames §3 as “the ethical framework” and talks about reducing a threat to “what's called an acceptable level”, exactly as §3 does.
Three sections here are not on the recording. §5.3–§5.4 (accountability and social responsibility), §7 (responding to non-compliance with laws and regulations, NOCLAR) and §8 (technology and the Code) are in the notes only. They are examinable. Nothing in the recording contradicts them — the lecture simply stops short.
1 Introduction
The CIMA Code of Ethics sets out certain fundamental principles about how its members should behave.
It also recognises how members could be subject to certain threats that would compromise their behaviour and suggests ways in which members can be safeguarded against the operation of those threats.
So, the ethical framework recognises that there are:
Ethical principles to be followed
These are subject to risks
Accountants should use safeguards to avoid or to respond to risks.
The guide applies to all members of CIMA and also to all CIMA students. It is based on IFAC’s Ethical Code as developed and issued by IESBA, the International Ethics Standards Board for Accountants.
The Code is published by CIMA and is free to download. Cite it by name — CIMA Code of Ethics for Professional Accountants, issued January 2020 — rather than by a web address: CIMA's site has been reorganised more than once and old deep links no longer reach the document. Parts 1 and 3 of the Code are based on the IFAC (IESBA) code; Part 2, which is the part that applies to accountants in business, was developed jointly with the American Institute of CPAs.
2 The five fundamental principles
The CIMA fundamental principles are as follows:
Principle | What the Code requires | What it looks like in practice |
Integrity | To be straightforward and honest in all professional and business relationships. | More than honesty. It means saying so when something is amiss rather than concealing it or turning a blind eye; not being deliberately ambiguous; and standing up for what you believe. Changing a forecast you do not believe in is a failure of integrity even if nobody is deceived in the end. |
Objectivity | Not to compromise professional or business judgment because of bias, conflict of interest or the undue influence of others. | Being moved by the facts and only the facts. Avoiding the relationships and interests that would pull you one way before you have looked at the evidence. |
Professional competence and due care | To attain and maintain professional knowledge and skill at the level required to give a competent service, and to act diligently in accordance with applicable standards. | Keeping up to date with legislation and with accounting and auditing developments; not taking on work you are not qualified for; being careful and thorough. This is why CPD and lifelong learning (chapter 1 §11) are a professional duty and not a career option. |
Confidentiality | To respect the confidentiality of information acquired as a result of professional and business relationships, and not to disclose it without proper and specific authority, or use it for personal advantage. | Accountants have privileged access to price-sensitive and personal information — results before they are announced, salaries, plans. It survives the end of the relationship: you may use prior experience at a new employer, but not the old employer's confidential information. |
Professional behaviour | To comply with relevant laws and regulations and to avoid any conduct that the accountant knows or should know might discredit the profession. | It reaches conduct outside the office. It also governs marketing: no exaggerated claims for your own services, and no disparaging references or unsubstantiated comparisons to the work of others. |
The limits of confidentiality
Confidentiality is not absolute. A member may disclose confidential information where disclosure is required by law (reporting a suspicion of money laundering is the standard example, and there is more in §7), where it is permitted by law and authorised by the client or employer, and where there is a professional duty or right to disclose that is not prohibited by law.
There may also be circumstances where disclosure is in the public interest. The concept is not closely defined in law, so take legal and professional advice first. It is probably not in the public interest to disclose that an employer pays below the minimum wage; it probably is if the employer is misreporting safety checks and customers are likely to be injured.
3 The conceptual framework
Knowing the five principles is not the same as being able to comply with them, because real situations do not arrive labelled. The Code therefore sets out a conceptual framework — a method that works whatever the circumstances, and which deters the reader from concluding that something must be permitted merely because the Code does not specifically prohibit it.
The framework specifies an approach to (a) identify threats to compliance with the fundamental principles; (b) evaluate the threats identified; and (c) address the threats by eliminating them or reducing them to an acceptable level.
3.1 Identify
You have to be looking. The framework requires an understanding of the facts and circumstances — including the professional activities, interests and relationships involved — before you can see what is threatening what. The five categories of threat in §4 are the checklist to run over a situation. A single circumstance can create more than one threat, and one threat can put more than one principle at risk.
3.2 Evaluate — the acceptable level, and the reasonable and informed third party
Having identified a threat, you evaluate whether it is at an acceptable level. The Code defines that as a level at which a professional accountant using the reasonable and informed third party test would likely conclude that the accountant complies with the fundamental principles.
The reasonable and informed third party test asks whether another party would be likely to reach the same conclusion you have. That party weighs all the relevant facts and circumstances you know or could reasonably be expected to know at the time. They do not have to be an accountant, but they have the knowledge and experience to understand and evaluate your conclusion, and they consider it impartially.
This is a genuinely useful exam device. When a question asks whether a threat is acceptable, stop asking “would I feel all right about this?” and ask instead: would a sensible, well-informed outsider who knew everything I know say that I had complied? That is the standard the Code actually sets, and it is much harder to fool than your own comfort.
Note what the standard is not. It is not “would anyone ever find out?” and it is not the old wording that some textbooks still print — reducing a threat to a clearly insignificant level, with safeguards sorted into three categories. That formulation belongs to the pre-2018 code and has been replaced by the acceptable-level test set out here.
3.3 Address
If the threat is not at an acceptable level, you must address it. The Code gives exactly three ways of doing so:
Eliminate the circumstances, including the interests or relationships, that are creating the threat.
Apply safeguards — where they are available and capable of being applied — to reduce the threat to an acceptable level.
Decline or end the specific professional activity.
Safeguards
The Code's definition: safeguards are actions, individually or in combination, that the professional accountant takes that effectively reduce threats to compliance with the fundamental principles to an acceptable level.
Read that carefully — it is narrower than students expect. A safeguard is something you do that actually works. Conditions that merely exist in the background (corporate governance requirements, the profession's training and experience requirements, a working complaints system, a stated duty to report ethics breaches, regulatory monitoring and discipline) are not safeguards: they are factors relevant to evaluating how big the threat is in the first place.
Sometimes there is no safeguard capable of reducing the threat far enough, and the circumstance creating it cannot be eliminated either. In that case option 3 is not a failure — it is the required answer. If the accountant cannot put adequate safeguards in place, the accountant must not carry out the work.
3.4 Judgment, an inquiring mind, and staying alert
Three requirements run right through the framework:
Exercise professional judgment. Apply your training, knowledge, skill and experience to the actual facts. Be alert to whether the information is complete, whether it comes from someone with the relevant expertise, and whether your own preconceptions or bias are affecting the judgment you are about to make.
Have an inquiring mind. This is a requirement in its own right, added to the international Code by IESBA's revisions promoting the role and mindset expected of professional accountants (effective 31 December 2021). It means considering the source, relevance and sufficiency of the information you have — and not accepting a conclusion just because it is the one presented to you.
Remain alert. If new information or a change in the facts might affect whether a threat has been eliminated or reduced to an acceptable level, you re-evaluate and address it again. A judgment made in March does not stay made when the facts change in June.
4 Threats to the fundamental principles
4.1 The five categories
The Code groups every threat into five categories. Learn them — they are the identification step of §3 in practice, and objective-test questions are built directly on them.
Threat | The Code's definition | A worked example |
Self-interest | A financial or other interest will inappropriately influence the accountant's judgment or behaviour. | You are promised a bonus if you sign off a doubtful sales forecast; or you hold shares in the client whose cash forecast you are preparing for its bank. |
Self-review | The accountant will not appropriately evaluate the results of a previous judgment made, or of an activity performed by them or by someone in their organisation, on which they will rely in forming a current judgment. | You are asked to review your own budget. Any error of principle in the original will simply be repeated in the review. |
Advocacy | The accountant will promote a client's or employing organisation's position to the point that objectivity is compromised. | Supporting your employer's case in a dispute, or promoting its shares, with more conviction than the evidence you have seen actually supports. |
Familiarity | Because of a long or close relationship with a client or employing organisation, the accountant will be too sympathetic to their interests or too accepting of their work. | The finance director is your brother. Or — far more common, and much harder to spot — the finance director has simply been a friend for fifteen years. |
Intimidation | The accountant will be deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence. | A threat to your promotion or your pay rise if the numbers do not come out a particular way; threatened litigation; in rare cases, physical intimidation. |
A single circumstance often creates several of these at once, and the exam rewards you for saying so. Preparing a cash-flow forecast for your employer's bank creates a self-interest threat (your job depends on the company surviving), a self-review threat (you are checking your own work), an intimidation threat (if management is pressing for a particular answer) and possibly a familiarity threat (you are relying on estimates from colleagues you like).
Once a threat is identified, work it through the conceptual framework in §3: evaluate whether it is at an acceptable level, and if it is not, eliminate the circumstance, apply safeguards, or decline the work.
4.2 Self-interest threats
Self-interest threats are the following:
Financial interests. Being promised a bonus for signing off a dubious sales forecast; or owning shares in a client or in your employer, so that you want the figures to look good. Auditors are not permitted to hold shares in an audit client at all — the threat is regarded as too great to safeguard.
Close family, personal and business relationships. For example, if your brother owns a major supplier.
Loans and guarantees from an employer or a client at unusually favourable rates. A soft loan from an organisation that does not normally lend is functionally an inducement.
Gifts and hospitality. A sliding scale with no bright line. Nobody worries about a pen or a sandwich; a week in the Caribbean is a bribe. The working rule the Code drives you towards is the intent behind the offer — and the practical rule of thumb is that if the gift is genuinely worth having, you should not accept it.
Contingent fees. A fee that depends on the answer you produce. If a consultant is paid $10,000 for an ordinary cash forecast but $20,000 for an optimistic one, the fee has bought the conclusion. This interferes directly with objectivity and is not permitted.
Care should be taken to ensure that you are not exposed to these threats.
4.3 Self-review threats
Self-review threats arise when you attempt to check your own work. It is very difficult to be sufficiently sceptical about having made a mistake. Furthermore any error of principle is likely to be repeated, so reviews should be carried out by an independent person.
4.4 Advocacy threats
Advocacy threats arise where a CIMA member or student promotes a point of view or opinion to the extent that objectivity is compromised. An example would be where an accountant promotes the shares in a listed company or supports the company in some sort of dispute. CIMA members and students should take care not to overstate the case for any decision or recommendation. You can give the facts but you mustn’t cross into giving unwarranted support.
4.5 Familiarity threats
Familiarity threats arise because of the close relationship between the accountant and client or employer. The close relationship can arise by friendship, family or through business connections. There is no general definition of what’s meant by ‘close relationships’, but if you were an auditor and your brother was the Finance Director of a client firm then there probably is a close relationship! If however the finance director was a remote cousin of yours, there might not be a close relationship. Note that there does not have to be any family or legal relationship: friendship can threaten independence and integrity.
If there appears to be a close relationship that would put independence at risk (or be suspected of introducing bias), the accountant should not carry out the work.
The familiarity threat is the one students under-rate, because there is no line to cross. Your brother is obviously a close relationship; a third cousin you have never met is obviously not. In between there is no rule, and no rule is possible.
The lecture's example is worth remembering: an audit partner and a finance director, both about 35, both with young families. The children get on, so the families see more of each other, so they take a holiday together. Nothing improper has been done at any point — and yet a relationship that started at arm's length is now one that a reasonable and informed third party would question. Much of professional ethics is not about being uninfluenced; it is about being seen to be beyond reproach.
4.6 Intimidation threats
The final group of threats are intimidation threats. These can deter an accountant from acting properly. Examples could be threatened litigation, blackmail, or there might even be physical intimidation, though it is to be hoped that that is rare. Blackmail could be more subtly applied and might relate back, for example, to a period where the auditor was not acting in accordance with the required ethical standards.
5 Independence, scepticism, accountability and social responsibility
The syllabus names four concepts here. None of them is a sixth fundamental principle; each is a quality that the five principles, properly applied, are meant to produce.
5.1 Independence
‘Independence’ is not mentioned as an ethical principle but it is a combination of integrity and objectivity. The accountant should stick up for what’s right, be honest and be objective. However, it becomes difficult to be independent if, for example, your job depends on producing a report with favourable conclusions.
5.2 Professional scepticism
This means approaching your work with a questioning mind. It does not mean that you expect that every piece of information you are supplied with has been deliberately falsified. On the other hand it does not mean that you automatically believe everything you are told.
You must walk a tight-rope between belief and disbelief, being aware that we are all human and can all be prone to:
Unwarranted optimism or pessimism
Making errors
Misunderstanding
Answering questions in a rush without really thinking about them
Avoiding trouble for ourselves and colleagues
All of these frailties mean that accounting information and estimates will be, from time-to-time, incorrect. Therefore, information needs to be checked. Certainly any information or explanations which look odd or unfeasible needs to be followed up.
Accountants should also be aware of another human frailty: dishonesty. Dishonesty exists too, and from time to time you will be given information that deliberately misleads or covers up a problem.
5.3 Accountability
Accountability means being answerable for the judgments you make — being willing to explain what you concluded, why, and on what information.
The Code builds it in. Having addressed a threat, a member is required to form an overall conclusion about whether the action they took, or intend to take, eliminates the threat or reduces it to an acceptable level; and in forming that conclusion they must review the significant judgments made and again apply the reasonable and informed third party test. That is accountability written as a requirement: a judgment you cannot justify to an informed outsider is not one you are entitled to make.
It is also why documentation matters. In the NOCLAR provisions of §7 the Code positively encourages a member to record the matter, the discussions held, the decisions taken and how they were satisfied with the outcome. If the matter is ever examined, the file is the only evidence that the framework was applied at all.
5.4 Social responsibility
Social responsibility is the public-interest duty of chapter 1 §6 turned into a working obligation. A distinguishing mark of the profession is its acceptance of responsibility to act in the public interest, so an accountant's duty is not exhausted by satisfying the individual client or employer who pays them.
In this chapter it shows up in three concrete places: the confidentiality principle bends where the public interest requires it (§2); the whole point of the conceptual framework is to protect users of information who are not in the room; and NOCLAR (§7) can require a member to disclose their employer's non-compliance to an authority precisely because of the harm to investors, creditors, employees or the general public. Corporate social responsibility as an organisational strategy is chapter 7.
6 Resolving an ethical conflict
Sometimes, despite attempting to avoid or reduce threats to ethical principles, CIMA members and students can feel themselves under pressure to behave in a non-ethical manner or can be subject to ethical conflicts.
The syllabus calls this an ethical dilemma, and pairs it with two more words: a tension, where two legitimate obligations pull in opposite directions, and a synergy, where acting ethically and acting in the organisation’s own interest point the same way. This chapter says ethical conflict for the same thing, because that is the Code’s word; §6.3 is the checklist CIMA publishes for working one through.
An ethical conflict arises when a member encounters one or both of the following:
(a) Obstacles to following an appropriate course of action due to internal or external pressures.
(b) Conflicts in applying relevant professional and legal standards.
For example, a member suspects a fraud may have occurred, but reporting the suspected fraud would violate the member’s responsibility to maintain the confidentiality of his or her employer’s confidential information. Another example could arise if a deposit from a client should, by law, be placed in a separate client’s account, but is paid into the company’s ordinary account.
6.1 Conflicts of interest
A conflict of interest is a particular kind of ethical conflict, and it creates a threat to objectivity and sometimes to confidentiality as well. It arises where an activity you are undertaking involves a matter on which two or more parties have conflicting interests, or where your own interest conflicts with a party you are performing the activity for.
The pattern is always the same. Your brother's company is bidding for a contract you are evaluating; you own shares in the supplier you are appraising; you are advising two departments whose budgets are competing. The response is also always the same: identify the interests involved, disclose the conflict to those affected, and then either obtain their consent to continue, put a specific safeguard in place (someone independent takes the decision, or you are screened from the information), or stand aside altogether. What you must never do is take the decision quietly and hope it comes out even.
6.2 Working through it
Once an ethical conflict is encountered, a member may be required to take steps to best achieve compliance with the rules, fundamental principles and the law. In weighing alternative courses of action, the member should consider factors such as the following:
Relevant facts and circumstances, including applicable rules, laws, or regulations, must be investigated.
Determine the ethical issues involved.
Investigate the established internal procedures.
The member should also be prepared to justify any departures from internal procedures that the member believes were appropriate in applying the relevant rules, fundamental principles and law.
Before pursuing a course of action, the member should consider consulting with appropriate persons within their employer.
If a conflict remains unresolved after pursuing the selected course of action, the member should consider either consulting with other individuals for help in reaching a resolution or obtaining advice from an appropriate professional body or legal counsel. The member also should consider documenting the substance of the issue, the parties with whom the issue was discussed, details of any discussions held, and any decisions made concerning the issue.
If the ethical conflict remains unresolved, the member will in all likelihood be in violation of one or more rules or fundamental principles if he or she remains associated with the matter creating the conflict. Accordingly, the member should consider his or her continuing relationship with the specific assignment or employer.
In practice the routes open to a member are:
Seek advice from his or her manager.
If that manager is the problem, then the matter can be escalated to higher management and the audit committee if there is one.
A complaint can be made under the employer’s grievance procedures.
Advice can be sought from your mentor (if there is a mentoring arrangement).
Seek advice from CIMA.
There might be a statutory duty to report on problems (eg money laundering).
Whistle-blowing, as a last resort (see chapter 9).
6.3 CIMA's Ethical Checklist
CIMA publishes an Ethical Checklist that turns all of this into eight steps. It is named in the syllabus, so learn the sequence. The checklist and the ethics helpline are both published by CIMA and free to members and registered students; find them through CIMA's own ethics pages rather than through an old bookmark.
Each step in more detail:
Step 1 — Check all your facts, and document where possible
Identify all relevant facts.
Do not rely on word of mouth, or assumptions. Is it really your problem?
Can anybody else help?
Step 2 — Is it ethical? Have you considered the ethical issues involved?
Does it feel right?
How would you feel if you saw it in a newspaper?
How would you feel about your peers, friends, family knowing about it?
Have you referred to the CIMA Code of Ethics?
Have you referred to your internal Code of Ethics/Conduct and other internal policies?
Step 3 — Is it legal?
Is the issue in question regulated by the law – national and international?
Does it comply with rules, policies, standards and contracts imposed by relevant regulators/bodies and by your employer?
Step 4 — Identify which fundamental principles are affected
Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour
Step 5 — Identify the affected parties
Who are the individuals, organisations and key stakeholders affected?
In what way are they affected?
Are there conflicts between different stakeholders?
Understand the effects of non-action to the organisation, to yourself and to society.
Step 6 — Possible courses of action: internal and external escalation
Escalate internally; consider grievance procedures.
Document every action you take to resolve the conflict.
Escalate externally to auditor, legal advisors, professional body.
Step 7 — Seek professional or legal advice
Your internal whistle-blowing or speak-up helpline.
Legal advisors.
CIMA ethics helpline: free to members and students.
Step 8 — Refuse to remain associated with the conflict
If resolution seems unlikely, disassociate yourself from the issue – in writing if necessary.
Legal advice may be needed if this affects your employment status or if you are implicated in any way with the issue.
As a very last resort, there is external whistle-blowing (see chapter 9).
7 Responding to non-compliance with laws and regulations (NOCLAR)
Everything so far has been about a threat to your compliance with the principles. This section is about a different problem: you discover that your employer is, or may be, breaking the law.
The Code answers it with a framework of its own, universally known as NOCLAR — responding to non-compliance with laws and regulations. It was introduced into the international code by IESBA with effect from 15 July 2017 and is carried in the CIMA Code as Section 290 for professional accountants in business, and Section 360 for accountants in public practice. The version below is Section 290, because that is where a BA4 student will be.
7.1 What counts as non-compliance
Non-compliance comprises acts of omission or commission, intentional or unintentional, which are contrary to the prevailing laws or regulations, committed by your employing organisation, by someone charged with its governance, by a member of its management, or by anyone else working for or under its direction.
The section covers two kinds of law: those generally recognised to have a direct effect on material amounts and disclosures in the financial statements; and other laws with no direct effect on the numbers but where compliance is fundamental to the operating aspects of the business, to its ability to continue in business, or to avoiding material penalties. The Code's own examples of the second kind are worth knowing:
Fraud, corruption and bribery.
Money laundering, terrorist financing and proceeds of crime.
Securities markets and trading.
Banking and other financial products and services.
Data protection.
Tax and pension liabilities and payments.
Environmental protection.
Public health and safety.
Two things fall outside it: matters that are clearly inconsequential judged by their nature and their impact on the organisation, its stakeholders and the public; and personal misconduct unrelated to the organisation's business activities.
7.2 What the member is trying to achieve
The Code states the objectives directly. A distinguishing mark of the profession is its acceptance of the responsibility to act in the public interest, so when responding to non-compliance the member's objectives are:
To comply with the principles of integrity and professional behaviour.
By alerting management, or where appropriate those charged with governance, to seek to enable them to rectify, remediate or mitigate the consequences of the non-compliance — or to deter it where it has not yet happened.
To take such further action as is appropriate in the public interest.
That ordering matters. NOCLAR is not a whistle-blowing rule. Its first instinct is to get the organisation to put the matter right itself; going outside is the residual step.
7.3 What to actually do
Any professional accountant in business | A senior professional accountant in business | |
Who this is | Anyone. | Directors, officers and senior employees able to exert significant influence over, and make decisions about, the organisation's human, financial, technological, physical and intangible resources. More is expected of them, because of their role and their sphere of influence. |
First step | Follow any protocols and procedures the organisation already has for reporting non-compliance. If the accountant's own immediate superior appears to be involved, go to the next higher level of authority. | The same protocols — and then obtain an understanding of the matter: its nature and the circumstances, how the relevant law applies, and an assessment of the potential consequences to the organisation, investors, creditors, employees and the wider public. |
Then | Inform an immediate superior so that they can take appropriate action. | Discuss the matter with your superior and, as the situation requires, with those charged with governance; take steps on a timely basis, having regard to the potential harm; and determine whether the matter needs to be disclosed to the external auditor. |
Further action | In exceptional circumstances, disclosure to an appropriate authority may be the appropriate course. | Exercise professional judgment on the need for, and the extent of, further action — taking into account whether a reasonable and informed third party would conclude you had acted appropriately in the public interest. It may include informing the parent's management, disclosing to an appropriate authority even where there is no legal duty to do so, and resigning. |
Resigning is not a substitute for taking the other actions. The Code says so expressly. Walking away leaves the non-compliance in place, and the public-interest objective unmet.
7.4 Disclosure to an appropriate authority
This is the part that surprises students, and it is examinable. Where the member determines that disclosing the matter to an appropriate authority is the appropriate course, that disclosure is permitted by the Code notwithstanding the duty of confidentiality — it falls within the confidentiality principle's own exception. The member must act in good faith and exercise caution in the statements and assertions they make.
Disclosure is precluded if it would be contrary to law or regulation — anti-money-laundering legislation, for example, may forbid alerting the party concerned. Otherwise, whether to disclose turns on the nature and extent of the actual or potential harm to investors, creditors, employees or the public. The Code's own examples of when disclosure may be appropriate include bribery to secure large contracts; a regulated organisation where the matter threatens its licence to operate; a listed organisation where the matter could damage the fair and orderly market in its securities or pose a systemic risk; the sale of products harmful to public health or safety; and the promotion of a tax-evasion scheme to clients.
There is also an imminent breach provision. In exceptional circumstances, where the member has reason to believe that actual or intended conduct would be an imminent breach of a law causing substantial harm to investors, creditors, employees or the public, they must consider whether to discuss it with management or those charged with governance, and then exercise judgment on whether to disclose it immediately to an appropriate authority to prevent or mitigate the harm.
Finally, the Code encourages the member to document the matter, the results of discussions with superiors and those charged with governance, how they responded, the courses of action considered, the judgments made and the decisions taken. See §5.3 — this is accountability in operation.
8 Technology and the Code
The principles were written long before an accountant's judgment was routinely built on automated systems, models and machine-learning outputs. IESBA's technology-related revisions to the international Code, effective 15 December 2024, make technology an explicit source of ethical risk. They do not add a principle; they say what the existing ones now require.
Professional competence and due care extends to the technology you use and to its outputs. You need to understand what a system or model does well enough to judge whether its output is reasonable — you cannot discharge due care by relying on an answer you do not understand, however confidently the software presents it.
Confidentiality extends to data held and processed in systems, including data you put into a tool that is outside your organisation's control. Using confidential data for a purpose it was not given for is a breach whether a human or a model does it.
Complexity is dealt with explicitly. Where technology makes a situation complex, that does not suspend the conceptual framework — it is exactly when the framework, professional judgment and an inquiring mind matter most.
For BA4 this is awareness, not detail. What you should be able to say is that the same five principles and the same three-step framework apply to work done with technology, that the accountant remains responsible for an output they have relied on, and that data confidentiality does not stop at the organisation's firewall.
9 The Code, the law, and your contract of employment
By and large the law is silent on accountants’ professional ethics. There might be occasional overlaps such as being able to sue an accountant for damage caused if work was carried out negligently, but it has been left up to CIMA and other accounting bodies to devise and to police the ethical code.
Note, as mentioned in Chapter 1, that if national law and ethical guides conflict, CIMA states that the law should be followed. For example, you will see above (§2) that a CIMA ethical principle is confidentiality. However, if tax legislation requires you to provide information to the government about your employer’s business practices, then you must comply with the law.
There is a third source the syllabus expects you to place alongside those two: your contract of employment. The Code's own preface settles the order. Members and registered students must have regard to the Code irrespective of their field of activity, of their contract of employment, or of any other professional memberships they hold.
So the working order is: the law first; then the Code; and a contract cannot release you from either. An employer cannot instruct you out of the Code, and a confidentiality clause in a contract cannot prevent a disclosure the law requires or that the Code permits in the public interest. What a contract can do is impose obligations that go further than the Code — and it can, of course, be terminated, which is why step 8 of the checklist and the resignation option in §7 are as serious as they are.
10 Chapter questions
Work each one before reading the answer.
Which of the following is/are not one of the five fundamental ethical principles of CIMA?
Choose all that apply.
A Honesty
B Objectivity
C Professional behaviour
D Prudence
E Confidentiality
F Professional scepticism
Show answerHide answer
Which of the following are attributes of ‘professional scepticism’?
Choose all that apply.
A Assume everyone is trying to deceive you.
B Assume everyone tells the truth.
C Be aware that incorrect information might be given inadvertently.
D Follow up inconsistencies in information.
Show answerHide answer
CIMA has published a checklist, or pathway to guide members if they are faced with ethical conflicts.
Place the following (incomplete) steps in the correct order.
Is it ethical?
Seek professional or legal advice
Check your facts
Identify the affected parties
Show answerHide answer
What is the ultimate step that a professional accountant should take if they cannot resolve an ethical conflict?
Show answerHide answer
A CIMA member has been asked to prepare and check a cash-flow forecast for his/her employer. The forecast will be sent to the company’s bank as the basis for extending the company’s overdraft.
What ethical threats might be created here?
Show answerHide answer
11 Test your knowledge
Two quick checks before you move on: work through the flashcards to fix this chapter’s key terms and definitions, then sit the objective questions for exam-style practice. Both mark themselves and explain the answers as you go.
CIMA’s Code of Ethics
12 questionsAnswer the questions one at a time. Your progress is saved so you can leave and come back.
Open chapter practice