Question

What are the four ethical standards in the Institute of Management Accountants' Statement of Ethical Professional Practice? Describe the meaning of each of the four standards. How does each of these standards impact planning, directing, and controlling?

Answer 1

The four ethical standards in the Institute of Management Accountants' Statement of Ethical Professional Practice are competence, confidentiality, integrity, and credibility.

Competence means maintaining an appropriate level of professional expertise by continuously developing knowledge and skills needed to perform professional duties in accordance with relevant laws and regulations. It also includes providing support informationto make decisions and recommendations that are accurate, clear, concise, and timely.

Confidentiality means keeping information confidential other than when disclosure is authorired or legally required. It also includes informing all relevant parties regarding proper use of confidential information.

Integrity means mitigating actual conflicts of interest. It also involves regular communication with business associates to avoid apparent conflicts of interest.

Credibility means to communicate information fairly and objectively and to disclose all relevant information that could be expected to influence an intended user's understanding of the report.

Each of the standard affects all three of managers' responsibilities. Each of these standards affects how the company does planning, controlling and directing since these principles guide how the company should perform. That is, under ethical standards.