PART A: An ethics framework Introduction Recalling the statement made on the firm’s Independence and Ethical Standards CD-ROM in 1999, Barbara Ley Toffler, former partner-in-charge of the Ethics and Responsible Business Practices Division of Arthur Andersen United States (1995–99), wrote:
typical issues are dynamic in nature, and a discussion of the current demands for accountability will provide an insight. Following a historic surge of corporate collapses in the early years of the 21st century, the accounting profession has embarked on regulatory and other reforms in response to the increasing amount of public scrutiny.
It is Arthur Andersen’s lack of accountability that has inspired me to write this book. As an observer of corporate cultures, I believe strongly that the suicide of Arthur Andersen — and the assault on the investing public’s trust — could have been avoided had people paid attention to the danger signs flashing everywhere in the late 1990s . . . [This] is a book about what it was like to work at a respected company as its culture began to decay. It is also about what happens when the values of an organisation begin to distort your own. The book, Ethics, governance and accountability: a professional perspective, is a timely reminder for accountants and auditors of their roles in the competitive, highly regulative and complex business environment. The book has one theme: the long-term viability of a fair market is dependent on the effective and ethical interactions of individuals, the governance body, organisations and regulators. The ethical dispositions of individuals underpin behaviours, which, collectively, provide the framework for ethical cultures, sound values and good leadership, resulting in a fair and transparent system of accountability and responsible practices. This is the ethics framework that affects us all. Hence, the book aims to build the basic foundation for ethics, applicable for accountants and finance professionals in business. The book offers a rich base of knowledge, theories and principles, which are relevant for the ethics framework. This chapter aims to provide the background to contextual matters concerning accountants. It sets the scene for readers to appreciate the significance and value of ethics in the corporate environment. An ethics framework is introduced, showing how ethics, corporate governance and accountability are interrelated and support the functioning of a fair market. We shall explore the risks and supports of the ethics framework for business. Within the framework, we will identify the typical issues that accountants and the accounting profession need to address. The
CHAPTER 3 | INFORMATION SYSTEMS ETHICS
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