What does the IMAs Statement of ethical Practice require managerial accountants to be?

For the first time in 12 years, the Institute of Management Accountants (IMA) has released an updated version of its ethics guidance, Statement of Ethical Professional Practice, which takes into consideration changes in the management accounting profession and whistleblower provisions in the Dodd-Frank Act.

“Quite a bit has changed in our profession since 2005 and these updates ensure our ethics guidance to members and the profession stays current with on-the-job practice,” Curt Verschoor, CMA, CPA, chair-emeritus of the IMA’s Committee on Ethics, said in a prepared statement. “The new ethics statement encourages professional judgment and challenges members to demonstrate ethical behavior in every aspect of their lives.”

The newly updated Statement of Ethical Professional Practice, which went into effect on July 1, replaces the previous version published in 2005 and reflects changes in the business and regulatory environment, as well as the globalization of the management accounting profession. It’s rooted in the IMA’s ethical principles of honesty, fairness, objectivity, and responsibility.

The statement describes specific requirements for management accountants to heed according to the IMA’s four standards: competence, confidentiality, integrity, and credibility.

“Being principles-based, the statement aspires to be broadly applicable, easy to understand, and helpful for management accountants in their efforts to serve as leaders of integrity and ethics,” said Edward Manley, CPA, current chair of the IMA Committee on Ethics.

The specific standards requirements include:

1. Competence. Enhance knowledge and skills, perform professional duties in accordance with relevant laws and regulations, make recommendations that are accurate and timely, and recognize and help manage risk.

2. Confidentiality. Information should be confidential unless disclosure is legally required or authorized, let relevant people know the importance of confidential information, and refrain from using confidential information in illegal or unethical ways.

3. Integrity. Mitigate conflicts of interest or warn of possible conflicts of interest, refrain from engaging in any conduct that would prevent the ethical performance of duties, avoid activities that would discredit the profession, and place ethics and integrity of the profession above personal interests.

4. Credibility. Communicate fairly and objectively, provide all relevant information that could influence a user’s interpretation and understanding of the reports or analyses, report any delays or deficiencies in information according to law or the organization’s policies, and communicate professional limitations or other constraints that would affect responsible judgment or successful performance.

The revised guidance also notes that IMA members may face unethical issues or behaviors, which should be addressed with active resolution. That requires consideration of the risks involved and whether there is protection against retaliation.

Managerial accounting is an internal business function responsible for managing a company's financial information. Business owners often use managerial accounting to allocate business costs to goods or services, prepare operational budgets and forecast production output or sales.

Ethics is an important part of managerial accounting, and companies follow a code of ethics or conduct that addresses ethical issues/concerns for management accountants. The ethical dilemmas of managerial accountants are increasing in response to big data, artificial intelligence and other technologies, as reported in the September 2019 issue of the CPA Journal. Ethical codes of professional organizations provide helpful guidance.

Institute of Management Accountants (IMA)

The Institute of Management Accountants (IMA) is a professional organization responsible for creating managerial accounting guidelines. The IMA provides managerial accounting ethics for licensed accountants, and non-licensed accountants also can use these ethical standards to govern their accounting career. The IMA's ethical principles are based on honesty, fairness, objectivity and responsibility. IMA members must use these ethical principles when engaging in accounting services for their company and the general public.

IMA Professional Standards

The IMA stresses four standards of ethical conduct for management accountants. IMA Statement of Ethical Professional Practice examples define how accountants should conduct themselves in their daily business affairs.

Example:

• Competence. Accountants must possess the professional expertise they advertise, and they have to keep their accounting knowledge and skills fresh through continuing education.

• Confidentiality. Accountants can only disclose information at their supervisor's discretion.
  

• Integrity. Accountants are prohibited from engaging in unethical conduct.

• Credibility. Accounting information must be communicated fairly and objectively to all business stakeholders.

Managerial ethics ensure that all financial information is reported to business owners, directors or managers. Accountants who fail to report negative information or use a company's internal financial information for personal gain can create serious legal situations for businesses. Business owners often require all information, whether good or bad, when reviewing business operations and making decisions. Accounting ethics also ensure that each employee can be trusted with sensitive business information.

Circumventing Unethical Behavior

Companies may choose to act unethically in the business environment. Business owners may determine that unethical behavior is not necessarily illegal, a logic that creates a gray-shaded area in business. Managerial accountants constantly may push ethical limits when recording and reporting financial information. Companies should provide detailed explanations to those conducting external audits regarding questionable accounting procedures to ensure adherence to IMA standards of practice.

Consequences of Unethical Actions

Accountants who fail to abide by the IMA's accounting ethical code face a variety of punishments. Accountants may lose their professional certification, be removed from accounting positions and face legal penalties depending on their inappropriate actions. Managerial accountants who do not disclose inappropriate accounting operations in their company also can be held liable. Maintaining the general public's trust in companies is a primary responsibility of managerial accountants.

What is the IMA's statement of ethical professional practice?

Which of the following is an ethical standard of conduct for managerial accountants 1 competence 2 confidentiality 3 integrity 4 objectivity?

Should a management accountant adhere to ethical standards?

Which of the following is not one of the four statements of ethical professional practice issued by the IMA?