Business ethics means applying moral principles to business decisions: doing what is right and fair, not just what is legal or profitable. Accountants follow five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, and must act in the public interest.
Key definitions
| Term | Meaning |
|---|---|
| Profession | A body of theory and knowledge used to support the public interest |
| Professionalism | Acting in a way that supports the public interest |
| Public interest | Decisions that benefit society, not just individuals |
| Responsible leadership | Ethical decisions, moral courage and working with stakeholders for positive change |
The five fundamental principles
| Principle | In practice |
|---|---|
| Integrity | Be honest and straightforward |
| Objectivity | No bias, conflicts of interest or undue influence |
| Professional competence and due care | Keep knowledge and skills up to date; work diligently |
| Confidentiality | Do not disclose information without consent or a legal duty |
| Professional behaviour | Obey laws and avoid bringing the profession into disrepute |
Ethical theories
| Theory | Core idea | Question to ask |
|---|---|---|
| Utilitarianism | The right action creates the greatest good for the greatest number | What are the consequences? |
| Deontology (Kant) | Some duties must be followed whatever the outcome | Is this my duty? Would I accept everyone doing it? |
| Virtue ethics | Act as a person of good character would | What would a good person do? |
| Rights and justice | Respect people's rights and treat them fairly | Is it fair? Does it respect rights? |
Ethics and stakeholders
| Stakeholder | Ethical expectation |
|---|---|
| Shareholders | Fair returns and honest reporting |
| Employees | Fair pay and treatment, safety, development |
| Customers | Fair treatment and quality products |
| Suppliers | Fair terms and prompt payment |
| Community | Responsible conduct (see CSR) |
Dealing with an ethical conflict
- Gather the facts, the ethical issues and the principles involved.
- Check the organisation's internal procedures.
- Consider the alternatives and their consequences.
- Discuss with those charged with governance; take advice from the professional body or a lawyer.
- Decide, record the decision, and if necessary withdraw from the engagement.
Business ethics in ACCA SBL
Professionalism and ethics sit in syllabus area A, and ethical judgement is assessed throughout. A typical case has a director asking you to delay bad news or a sales team offering inducements. Name the principle at risk, explain the consequences for stakeholders, and recommend a practical, ethical course of action. See also the UK Bribery Act and threats to independence.
FAQs
What is business ethics?
The application of moral principles to business decisions and behaviour: doing what is right and fair towards shareholders, staff, customers, suppliers and society, not just what is legal or profitable.
What are the five fundamental ethical principles for accountants?
Integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. They appear in the ACCA Code of Ethics and Conduct and the IESBA Code.
What are the main ethical theories?
Consequentialism or utilitarianism (judge actions by their results), deontology (follow duties and rules, as in Kant), virtue ethics (act as a good person would), and rights and justice theories.
What is the public interest?
The collective wellbeing of society. Professionals act in the public interest when they put society's needs before their own or a client's interests.
What are the drawbacks of a code of ethics?
It can be vague and open to interpretation, cannot cover every situation, and may be treated as a box-ticking exercise rather than changing behaviour.
What safeguards protect ethical behaviour?
Professional safeguards (education, CPD, regulation), work environment safeguards (controls, review, whistleblowing routes) and individual safeguards (seeking advice, mentoring, using the professional body).