Business Ethics and Corporate Governance
What this domain tests
This domain tests ethical reasoning, professional codes, governance structures and the board's role in accountability, independence and stakeholder protection.
Core rules
- Ethical frameworks: utilitarianism judges outcomes; deontology judges duties and rights; virtue ethics judges character.
- IMA Statement of Ethical Professional Practice: principles are honesty, fairness, objectivity and responsibility; standards are competence, confidentiality, integrity and credibility.
- Resolving ethical conflict: follow the organisation's policy, discuss with the immediate supervisor, escalate to the audit committee or board, and consult legal counsel. Do not disclose confidential information outside approved channels.
- Governance: the agency problem arises from separation of ownership and control. Independence requires separating chair and CEO, and independent audit, remuneration and nomination committees.
- Frameworks: OECD Principles, SOX (CEO/CFO certification and internal control reporting) and the UK Corporate Governance Code (comply or explain).
Worked example
A CFO is pressured to recognise revenue early to hit a target. A utilitarian view shows long-term reputational and legal harm; deontology shows a duty not to misrepresent; the IMA integrity and credibility standards prohibit the action. The correct response is to refuse, document the request and escalate to the audit committee. Confidentiality does not justify concealing wrongdoing.
Traps
Treating legality as sufficient for ethics; using “everyone does it” as justification; escalating outside the company before internal channels; and confusing confidentiality with covering up misconduct.