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.

So welcome Russ to IMA's Count Me In.

We are so happy you could join us for
this special and important episode.

Pleasure to be here,
Margaret, and, thanks for,

initiating this discussion about ethics.
It's a personal favorite topic of mine.

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?

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.

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?

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.

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?

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.

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?

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.

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?

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.

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?

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.

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.