Challenges in business ethics

Corruption, scandals, deceit; the corporate world has been marred by such occurrences in recent times. Ethics and finance have been at the centre of many scandals and Sri Lanka especially has seen the fall of companies which failed to operate in line with the ethical codes that govern it.

Two of the world’s most prestigious accounting bodies, AICPA and CIMA, jointly established the Chartered Global Management Accountant (CGMA) designation to elevate the profession of management accounting. The bodies seek to ensure that businesses are successful in the long run and therefore management accountants are required to follow strict codes of ethics to ensure their duties are performed with utmost integrity. The CGMA survey report, which was launched in Sri Lanka on 23 May, draws on methodology used by the Institute of Business Ethics, exploring key ethical questions by focusing on prevalent business challenges.

Recognising the importance of effectively facing the business challenges in the contemporary Sri Lankan business environment, CIMA Sri Lanka Division presented an overview of the key findings of the report. Andrew Harding, Managing Director – CIMA, who presented the revelations of the report, highlighted the findings which were categorised as Ethical Culture, Accounting for Ethics, Ethical Dilemmas and Pressures and Business issues.

It was revealed that there has been an increase of 10%-15% in the number of organisations providing both statements of ethical values and a code of ethics and Sri Lanka boasts a rate of 77% in the field. Adding on to the positives, the report also elucidated that there was an increase of almost 20% in organisations both collecting and reporting on ethical information.

However in the interim, the findings indicated the number of firms collecting and reporting information is still a minority. Andrew Harding pointed out that a majority of management accountants (61%) feel it is important to collect and analyse ethical information, but one in five do not believe their organisation will do so in the near future. This matter was discussed at length during the panel discussion which followed the Managing Director’s speech.

Those present highlighted that employees in Sri Lanka rarely raise their voice on matters concerning unethical behaviour and experts arrived at the consensus that the cultural setting in the country is the reason for the predicament. On a related note, it was brought to light that the hierarchy’s role in upholding ethics is diminishing. Andrew Harding therefore stressed that it is of utmost importance that the management continues to uphold the moral code which governs the corporate world      

Despite an increase in ethical codes and training, there is greater pressure within organisations to act unethically and this trend can be widely seen in emerging economies. Sri Lanka, which has a solid framework pertaining to ethics, indicates that 52% of its employees are under pressure to break the set codes. The governance must therefore construct a framework to ensure that this situation is rectified immediately. The CGMA report illustrates that bribery has risen from sixth to third in the rankings of issues of concern, and the current events reported in the news are evidence of the fact.

Data in the report cites that South Africa, which had an appalling corporate code 15 years ago, has now made a considerable acceleration. Therefore, amidst the slightly alarming findings of the CGMA reports, there is hope that the Sri Lankan corporate sector which has seen rapid progress within the past few years will reach its potential. In the words of Andrew Harding, Managing Director of CIMA, always remember that “an unethical business will lose business”.