Professional Ethics - Behavioural Conduct Of Individuals

Task 1

1.1 Fundamental principles of ethical behaviour

Ethics is a collection of moral principles that guide a professional about their behavioural conduct. In any banking organisation, professional accountants are expected to behave in an ethical, fair and dignified manner which does not involve getting engaged in any kind of illegal or unethical practice. In this regard, there are certain fundamental principles of ethical behaviour that are required to be adhered to by accountants, these are:-

Integrity: It is required by professional accountants to be honest as well as straightforward while getting involved in any financial transaction. Also, they should maintain integrity in corporate relationships.

Objectivity: Professional accountants should not allow bias or undue influence to affect their decisions or professional judgment in organisational context.

Professional competence and due care: Professionals in financial institutions are required to possess high knowledge level and skill set so as to deal with clients in an effective manner. It is essential that act as per the laws and legislations in accordance with professional competence and diligence.

Confidentiality: Professional accountants should not disclose important information of clients to any person without proper authority. As a result of professional or personal relationships, no professional is allowed to use confidential information of clients for any hidden motive or advantage.

Professional Behaviour: An accountant deals with the money of a large number of clients daily, thus it is their duty to act in compliance with all laws and legislations. They should not get engaged in any unethical or illegal practice (Duska, Duska and Kury, 2018).

1.2 Legal, regulatory and ethical requirements affecting the accounting and finance sector

Accounting and finance sector is largely concerned with dealing with funds of a large number of persons on daily basis. To avoid hindrance from government or professional bodies, accounts working within such organisations are required to have proper knowledge of all the laws and legislations governing this sector. This will enable them to act in a desirable manner without getting involved in unethical practices. Such laws affecting accounting and finance sector are briefly explained below:-

Civil law: It is a body of laws and regulations that protect the rights of citizens by offering legal remedies to them. It covers areas of statute such as torts, property, contracts and family law. Professionals are required to possess knowledge of this and act in public interest at all times.

Criminal law: It is a law that defines punishments for those who commit crimes like threatening a person, performing harmful activities for one’s or anyone else’s, acting against moral welfare of public. Professional accountants should possess this in mind and act ethically and fairly without harming interest of any client or customer.

Compliance: Professionals working in financial institutions such as banks are required to comply with all the laws and legislations governing the sector (Duska, Duska and Kury, 2018). This becomes imperative to save themselves as well as the organisation from any undesirable legal consequence.

Code of practice: Dealing with money of public, an accountant is required to act with due care and professional competence. Also, they should not be biased towards anyone or allow personal relationships to override professional duties.

1.3 Role of professional bodies in accounts and finance sector

A professional who is operating in the accounts and finance sector is required to abide by the rules and regulations set by professional bodies. The bodies making and governing the compliance of accountants are International Federation of Accountants (IFAC) and Federation of European Expert Accountants (FEE). Both these professional bodies are necessary because:-

• They are responsible for promoting ethical conduct and behaviour by professionals
• They are accountable for the assurance of services delivered by their members
• They set rules and regulations that encourage Continuing Professional Development (CPD) of professionals and set requirements for accountants which needed to be abided by them at all times.
• They enforce a disciplinary framework at workplace and put forwards ethical and professional behaviour guidelines.

1.4 Reason behind individuals, organisations or industry sectors expected to adhere to code of conduct and practice

Code of conduct and practice is a written document that lays down the rules and regulations that have to be followed by individuals and organisations. Also, professional bodies enforce certain laws and guidelines that need to be strictly followed by professionals, entities and accounts and finance sector (Collis, Holt and Hussey, 2017). Compliance with code of conduct and practice allows professionals and organisations to maintain their membership within professional bodies. Breach of any rule or law may even lead to expulsion of membership. Also, code of conduct demonstrates a desirable way in which people and businesses within accounts and finance are expected to behave and thus, lead to an ethical practice.

1.5 Risks of improper practice to enterprise and the importance of vigilance

A financial enterprise and professionals within it are expected to behave in accordance with code of conduct and practice. There are many risks that are associated with improper practice of accountants functioning within banking organisations like HSBC. Such risks are described below:-

Operational Risks: It is the risk associated with non compliance of any set internal process, people or system within financial institutions. It can include unethical activities like tax evasion, market manipulation, fiduciary breach, data entry errors, bribery, misuse of confidential information etc. (Duska, Duska and Kury, 2018).

Money Laundering: It is the misuse of financial systems wherein professional accountants showcase that the money of client originally originated from conduct of illegal practices is obtained from a legal activity.

Terrorist Financing: It is an act wherein professionals within financial institutions provide finance or any type of financial assistance to terrorists or any non-state actor.

Such risks give rise to the importance of vigilance within an organisation. It keeps a check upon the activities within the enterprise and ensures that all professionals that are a part of the entity acts with due diligence and care. Also, it is a regulatory framework that makes sure that no fraud is being committed within org

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