Business Ethics
Ethics questions present a pressure situation and ask what a CMA should do. The marks are in the reasoning: identify the duty, the affected parties and the professional standard, then recommend a defensible action.
Frameworks and standards
- Teleological (consequences), deontological (duties and rules) and virtue (character) approaches can each be applied; a strong answer uses more than one.
- The fraud triangle: pressure, opportunity and rationalisation. Controls reduce opportunity; culture reduces rationalisation.
- ICMAI's code emphasises integrity, objectivity, confidentiality, professional competence and due care, and professional behaviour. Confidentiality yields to legal or regulatory disclosure.
- Conflict of interest must be disclosed and managed, not merely avoided privately.
Worked example
A supplier offers a ₹5 lakh personal payment to approve a rate that is ₹40 lakh above market. Facts: personal gain, company loss, likely falsified records. Stakeholders: shareholders, employees, the supplier and the profession. Alternatives: accept, refuse and renegotiate, refuse and report. Consequences: acceptance creates fraud and disciplinary exposure (and, where a public servant is involved, Prevention of Corruption Act, 1988 liability). Duty: objectivity and integrity; the payment is a bribe, not a gift. Decision: refuse, disclose the offer under the anti-bribery policy, document the market comparison and escalate to the audit committee. The ₹5 lakh is irrelevant against the ₹40 lakh loss and the licence-to-operate risk.
Traps
- Treating legality as sufficient ethics.
- Rationalising a small gift or industry practice.
- Breaching confidentiality without a legal basis.
- Failing to disclose a conflict before the decision, then claiming objectivity.