Contact Russ Porter: https://www.linkedin.com/in/russporter42/
Contact Margaret Michaels: https://www.linkedin.com/in/margaret-michaels/

IMA® (Institute of Management Accountants): https://www.imanet.org/

IMA's Ethics Center: https://www.imanet.org/career-resources/ethics-center

FULL EPISODE TRANSCRIPT
Mitch: (00:05)
 Hey, everyone. Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. I'm your host Mitch Roshong. And today I will be previewing a special bonus episode in our series. October 20th is global ethics day, a day created by the Carnegie council for ethics in international affairs. Global ethics day is an annual moment to empower ethics through the actions of individuals in organizations. It takes place annually on the third Wednesday of every October, ethics lies at the heart of the management accounting profession, and IMA considers ethics to be foundational to its work in core values. For this special count me in podcast, in honor, of this day, we are delighted to have IMA's CFO, Russell Porter discuss why ethics is so important to management, accounting and financial oversight for organizations. IMA's manager of brand content and storytelling, Margaret Michaels will ask for us to share his experiences working in management, accounting, some of the ethical dilemmas that can arise and how he learned to navigate questions around ethics to steer the organizations he has worked for in the right direction. Russ will also provide information on IMA resources that are available to members who want to learn more about navigating ethics. So to hear more about this very important topic, let's head over and listen to their conversation now.
 
 Margaret: (01:34)
 So welcome Russ to IMA's Count Me In. We are so happy you could join us for this special and important episode.
 
 Russ: (01:41)
 Pleasure to be here, Margaret, and, thanks for, initiating this discussion about ethics. It's a personal favorite topic of mine.
 
 Margaret: (01:48)
 I know you are very interested in helping IMA members navigate ethical questions and issues they face every day in their work. You even did an unscientific LinkedIn poll asking what the most important ethics issue facing accounting and finance professionals today is. What did you find out? And what do you believe is the most pressing issue they face?
 
 Russ: (02:11)
 Yeah, it's funny, Margaret. Unsurprisingly, I did not get a lot of responses. And a lot of the ones I did get were in one-to-one messages, as opposed to being on the LinkedIn message board. Ethics is one of those areas that people often don't like to talk about. Despite the fact that we read about issues of ethical lapses in the papers all the time, that said, when you look for them around any business environment, you'll see plenty of ethical issues. Most of them are addressed right up front in a company's culture, but when the ethical component of culture isn't strong enough, the temptation to overlook principles can overwhelm people. Keep in mind, also there are, in my mind, two types of ethics to consider: the macro and the micro. The micro is the one people often think about where an individual or a small group has to make a decision between the right way and the wrong way as if decisions were that black and white, but there are also macro ethical issues like sustainability, equitable treatment, proper governance, those are affected by individual decisions, but they can often have a much wider impact.
 
 Margaret: (03:25)
 Yes, I agree. I think we are seeing those wider impact issues around us every day. I know that I am much more aware of those macro issues. And I do think that business has really been stepping up to the plate to try to address public concerns related to the climate or income inequality or gender bias or racial injustice through their work on sustainability. In this way, sustainability really has an ethical dimension beyond just reporting non financials. Is this a change you welcome in the profession and how does sustainability change the paradigm for accounting and finance professionals from an ethical perspective?
 
 Russ: (04:07)
 So Margaret, all those items you just mentioned under the umbrella of sustainability economists call them externalities because in theory, these are effects that don't directly impact an organization making the decision. And for that reason, management accountants often exclude sustainability issues from a relevant cost benefit analysis. That idea of what costs are relevant to an organization. It's really been expanding though, in the eyes of consumers, regulators, and investors, they're all taking those elements into account when making their buying or investing decisions as society increases the focus on those areas, through the lens of ethical treatment of the planet and society, accountants, ignore those issues at their peril. I would also point out that, you know, perspectives on some of these macro ethical issues can vary greatly. Different cultures, whether those cultures are based upon geography, religion, political affiliation, or any other factor, they'll interpret an ethical approach to issues differently. Now exploring these different perspectives, that can really be valuable in increasing our understanding of the topics. But it's really important to be aware of how the societies in which we operate view these issues. For an management accountant, that perspective and that understanding - that's crucial.
 
 Margaret: (05:39)
 Those macro ethical issues do have many dimensions and awareness of that fact is critical for the accounting and finance profession, as well as society at large. And since we're on the topic of macro issues and changes affecting society, I think it's a good time to up something that has literally transformed the profession, which is technology and digitization. At IMA, we are acutely aware of how technologies like automation, AI, and data analytics have changed the way management accountants work. Upskilling in technology is something we champion, but while the technical skills involved with these technologies are significant, so are the ethical questions. What is your view of technology from an ethics perspective?
 
 Russ: (06:28)
 So Margaret, digitization, it's not just affecting the accounting profession, it's affecting almost every element of our lives and in society today. And there's a lot of good that comes out in terms of both individual, as well as societal welfare. That said, the application of technology, if not done well. Well, that can also exacerbate existing tendencies to a detrimental effect. For example, we've been hearing the term algorithmic bias lately, and that is the propensity for technology driven algorithms to lock in the biases of maybe the people who designed them, or maybe the data sets that were used to create baseline information on which those algorithms rely. Critics would point to areas that we've been hearing about in the news, like resume filtering, neighborhood profiling and banking and loans, or even facial recognition as emerging applications that can perpetuate inappropriate biases. Now, ethics enters into the equation as does management accounting in the design and the testing of these applications to make sure that they produce appropriate truly unbiased results. That's where the management accountant can be of value. Our profession can review and "audit" these types of technologies to ensure that they provide those unbiased answers the same way we apply our bias reviews to financial forecast and analysis.
 
 Margaret: (08:08)
 That's interesting. I never thought about auditing a technology, but it makes perfect sense in light of technology's pervasiveness and impact on our lives. It does sound like the perfect job for a management accountant. I wonder with COVID-19 and the rapid shift to remote work that many organizations had to quickly enable with technology, what new ethical issues and risks are arising. For instance, a recent IMA and ACCA survey found that one in five management accountants has directly or via work colleague encountered a situation where as a result of COVID-19, ethics were at risk of compromise. And these ethical dilemmas also come at a time when society at large is experiencing declining levels of trust in government, the media, and look to business to lead by example, according to the Edelman 2021 trust barometer. With so much weight being placed on management accountants and businesses in particular, to do the right thing, how can CFOs build a culture of trust within and outside their organizations? What kinds of support do they need to do this? And in addition to finance, what other departments are critical to building trust?
 
 Russ: (09:25)
 That's a surprising statistic. The one in five management accountants facing an ethical compromise issue. Now COVID may have exacerbated this trend, but, you know, candidly, the pressure on individuals has always been there, whether it's protecting a company's stock price, making sure that, you know, trying to protect the company's reputation or even one's own compensation. There's always a reason for accountants and other managers to manipulate, reporting, or hide negative information that might blemish the company or otherwise, you know, mislead investors, clients, regulators, inappropriately. Now there's always that pressure, but most companies effectively reinforce their ethical principles to counteract that pressure. And that comes from a series of measures. We we've all heard about tone at the top and lately there's been an emphasis on, you know, the mood in the middle where middle managers echo and reinforced the ethical standards of an organization, but really it does matter what leaders do and how they demonstrate their own responses, both to the pressure to perform, but also to identify unethical behavior in their firms when it arises. CFOs, we've got a lot of influence here, but we've also got support from legal, internal audit, external auditors, regulators, and the general public who are going to hold companies and organizations accountable for their ethical lapses. The best ally we have though in most organizations is the CEO and the line management team. When those leaders walk the talk call for and demonstrate ethical behavior, that's going to permeate the organization.
 
 Margaret: (11:19)
 Great, and it is critical for the CEO and line management to walk the talk, as you say, I'm thinking of recent financial fraud scandals like Enron, or Maydoff as examples of what happens when ethics is not part of the tone at the top. In fact, because of those scandals, many MBA programs have revamped their curriculum to include courses on ethics. Some colleges and universities even teach ethics as part of undergraduate accounting and finance programs. Why is it so important that students be taught ethics early in their career? And what was your personal experience learning about ethics? Was this something you learned as an undergraduate or did you become more aware of it as a working professional?
 
 Russ: (12:04)
 So, so I think it's vital, absolutely vital for students to learn about ethics in their undergraduate courses and continue that into later education, whether that's later in academia or in the workplace, I think it should be embedded into nearly every course in business, rather than being treated as a separate concept. It's, it's really ethics applies to everything we do. Now. I was fortunate in that I took an ethics class at my freshman year at the university of Delaware. So it became a part of many projects and discussions with my study groups early on. I've also worked at two companies, IBM and now IMA, where strong, ethical principles were a foundational element of the organization's culture. Not every company has that though, which is why it's important to start ethics education early. The real key is to make ethical decisions, instinctive a natural part of the thought process so that when employees are faced with an ethical dilemma, students and employees can, number one, recognize it. Number two, analyze it thoroughly and three act accordingly and communicating, using the strength of a principle-based approach to the ethical matter.
 
 Margaret: (13:28)
 I agree students who learn ethics early will be in a much better position to act in a principles based manner when issues arise. I think it also helps to have a trusted source to turn to for ethics guidance at every stage in your career. And I think that is the value of IMA. When you are a member of IMA, all ethics courses are offered on a complimentary basis, and you have a community of peers who must adhere to the IMA statement of ethical professional practice. As the condition of membership, IMA has a long history of providing resources for accounting and finance professionals to behave ethically. How important are professional associations like IMA in maintaining standards and ethics?
 
 Russ: (14:13)
 Margaret, I don't think that anybody ever goes to work and decides, I think I'm going to be unethical today. We all spend our days responding to the various pressures to which businesses and individuals, you know, have to respond. Sometimes the temptation is really great to sacrifice the long-term, like our principles for the short-term of getting through the day, the earning season or the audit. Organizations like IMA offer a structure for ethical decision making, which I think is key for accounting and finance professionals. IMA's statement on ethics in the profession, provides a framework for our members and our non-members to follow including guidance on how to handle difficult situations and what principles should not be compromised regardless of circumstance. These along with our ethical helpline, which aids management accountants in understanding IMA's ethics statement. Well, they're designed to give our teams the support that they may need in a very difficult circumstances and helping them make the tough calls to predict the true integrity of their organizations. Now, if you don't mind, I'm going to end where I started. Discussions of ethics can be really, really tough. They can be gateways to our individual morality and an exploration of one's ethics is really an exploration of one's character that can be uncomfortable for some people to openly discuss. But I really believe there's a real benefit to talking about the ethical codes of our workplaces. It helps communicate our culture to new employees. It reinforces the behavior of people at all levels of the organization, and it provides the long-term benefit of maintaining the integrity of our organizations. Ethics should and must be a bedrock of the accounting and finance profession.
 
 Closing: (16:17)
 This has been Count Me In, IMA's podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard, and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.