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MIDTERM REVIEWER OF GOVERNANCE AE10
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Ethics
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Honesty
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Loyalty (Fidelity) and
Confidentiality

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CHAPTER 5 - INTRODUCTION TO ETHICS

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CHARACTERISTICS AND VALUES ASSOCIATED WITH ETHICAL BEHAVIOR
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Fairness and
Openness

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Be caring, kind, and compassionate; share, be giving, be of service to others; help those in need and avoid
harming others
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Demonstrate respect for human dignity, privacy, and the right to self- determination of all people: ve
courteous, prompt, and decent; provide others with the information they need to make informed decisions about
their own lives; do not patronize, embarrass, or demean
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Respect for Others

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Obey just laws; if all law unjust, openly protest it; exercise all democratic rights and privileged responsibly by
participation (voting and expressing informed views), social consciousness, and public service; when in a
position of leadership or authority, openly respect and honor democratic processes of decision making, avoid
unnecessary secrecy or concealment of information, and assure that others have all the information they need
to make intelligent choices and exercise their rights
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Pursuit of excellence 9
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Be accountable, accept responsibility for decisions, for the foreseeable consequences of actions and
inactions, and for setting an example of others
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WHY DO PEOPLE ACT UNETHICALLY?
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Person's Ethical
Standards differ from
General Society
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Most people define ______ as conduct that differs from the way they believe would have been appropriate
given the circumstances
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It is important to understand what causes people to act in a manner that we decide is
unethical
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the person's ethical standards are different from those of society as a whole, or
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In many instances, both reasons exist
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Extreme examples of people whose behavior violates almost everyone's ethical standards are drug dealers,
bank robbers, and larcenists
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When people cheat on their
tax returns, treat other people with hostility, lie on employment applications, or perform below their competence
level as employees, most of us regard that as unethical behavior
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A considerable portion of unethical behavior results from selfish behavior
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In each case, the person knows that the behavior is inappropriate, but chooses to do it
anyway because of the personal sacrifice needed to act ethically
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Principles of Personal
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Compliance with the law
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Business Ethics
include among others

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There is no universally accepted definition of what constitutes a profession; yet, for generations, certain types of
activities have been recognized as professions while others have not
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Public accounting is relatively new as far as the ranking of the professions is concerned but it has achieved widespread
recognition in recent decades
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The most important of these characteristics are:
(1) a responsibility to serve the public
(2) a complex body of knowledge
(3) standards of admission to the profession
(4) a need for public confidence
Code of Good Governance for the Profession in the Philippines (E
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No
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This Code is adopted by the Professional Regulation Commission (PRC) and the 42 Professional Regulatory Boards to
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While each
profession may adopt and enforce its own code of good governance and code of ethics, it is generally recognized that
(PRC)

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This Code which covers the common principles underlying the
codes of various professions could be used by all professionals who face critical ethical questions in their work
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Professionals are required not only to have an ethical commitment, a personal resolve to act ethically, but also have
both ethical awareness and ethical competency
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Service to Others
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Professional
Competence

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Social and Civic
Responsibility

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They protect life, property, and public welfare
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In the performance of any professional service, they shall at all
times, maintain objectivity, be free of conflicts of interest, and refrain from engaging in any activity that would prejudice
their abilities to carry out their duties ethically
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In providing professional services, a certain level of competence is necessary, i
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, knowledge, technical skills,
attitudes, and experience
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Corollary to this, it is their express obligation to keep up with new
knowledge and techniques in their field, continually improve their skills and upgrade their level of competence and take
part in a lifelong continuing education program
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Each profession shall nurture and support one organization for all its members
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Through
teamwork within a cohesive professional organization, each member shall effectively observe ethical practices and
pursue continuing professional development as well as deepen one's social and civic responsibility
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Professionals shall always carry out their professional duties with due consideration of the broader interest of the
public
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As responsible Filipino citizens, they shall actively contribute to the
attainment of the country's national objectives
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Global
Competitiveness

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He or she shall rise up to
global standards and maintain levels of professional practices fully aligned with global best practices
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Equality of All
Professions

All professionals shall treat their colleagues with respect and shall strive to be fair in their dealings with one another
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All professionals perform an equally important, yet distinct,
service to society
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THIS IS REVIEWER FROM GCLASS GOVERNANCE
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According to Velasquez, et al
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Ethics is not the same as feelings and emotions
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Ethics is not about legality
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Ethics is not about following the culturally accepted norms
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Ethics is not science
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Ethics is not a religion
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Science, ethics

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Honesty
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Trustworthiness and Promise Keeping
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Fairness and Openness
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Respect for Others
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Pursuit of Excellence
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Two primary reasons why people act unethically:
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The person chooses to act selfishly
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▪ Employees taking a long lunch
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▪ Falsifying Time Sheets
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▪ Lying about illness or family emergencies to get excused
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Utilitarian Approach
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Fairness or Justice
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The virtue approach

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The rights approach

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Common good
approach
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Utilitarian seeks the greatest good for the greatest number
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Ethical action is one that best protects and respects the moral rights of those affected
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Respect and compassion for all are requirements of such reasoning
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Ethical action that focuses on character and virtues
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Code of Good
Governance for the
profession in the
Philippines
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This code covers the common principles underlying the codes of various profession
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Professionals are required not only to have an ethical commitment, a personal resolve to act ethically, but also have
both ethical competencies
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Part A: General
Application

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Integrity
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Professional
competence and due
care
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Professional Behavior
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The reasonable and
informed third party test

Specific Principle of Professional Conduct:
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Integrity and Objectivity
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Solidarity and teamwork
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Global Competitiveness
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mandatory in nature
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Objectivity
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Confidentiality
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to be straightforward and honest in all professional and business relationship
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to not allow bias, conflict of interest or undue influence of others to override professional or business judgments
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to maintain professional knowledge and skill at the level required to ensure that a client or employer receives
competent professional services based on current developments in practice, legislation, and techniques and act diligently
following applicable technical and professional standards
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to respect the confidentiality of information acquired as a result of professional and business relationships and
therefore, not disclose any such information to third parties without proper and specific authority, unless there is a legal
or professional right or duty to disclose, nor use the information for the personal advantage of the professional
accountant or third parties
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to comply with the relevant laws and regulations and avoid any action that discredits the profession
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-Applying the conceptual framework requires exercising professional judgment, remaining alert for new information and
to changes in facts and circumstances, and using the reasonable and informed third party test
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The reasonable and informed third party does not need to be an accountant, but would possess the
relevant
knowledge and experience to understand and evaluate the appropriateness of the accountant’s conclusions in an
impartial manner
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Typical Services of Professional Accountants in Public
Practice -Audits and review of financial statements
-Preparation, signing, certification reports of audits and other documents for publication, credit purposes or government
filing
-Preparation of Income Tax Return
-Represents clients on Tax and accounting related matters

Threats and Safeguards
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Self-review threat
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Familiarity threat
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Self-interest threat
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Advocacy threat

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Intimidation threat
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Safeguards created
by the profession,
legislation, or
regulation include

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Professional
Accountants in
Business
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Self-interest threat
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Advocacy threat
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Intimidation threat
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Business ethics:

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SPECIAL PURPOSE
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SPECIAL PURPOSE

MIDTERM REVIEWER OF GOVERNANCE AE10

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Ex
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Ex
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Example: A professional accountant acting as an advocate on behalf of an audit client in litigation or disputes with third
parties
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the threat that due to a long or close relationship with a client or employer, a professional accountant will be too
sympathetic to their interests
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the threat that a professional accountant will be deterred from acting objectively because of actual or perceived
pressures, including attempts to exercise undue influence over the professional accountant
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actions or other measures that may eliminate threat or reduce them to an acceptable level
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educational, training, and experience requirements
• continuing professional development requirements
• corporate governance regulations
• professional standards
• professional or regulatory monitoring and disciplinary procedures
• external review by a legally empowered third party of the reports, returns, communications, or information produced by
a professional accountant
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• Leadership of the firm that stresses the importance of compliance with fundamental principles
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• Policies and procedures to implement and monitor quality control of engagements
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• Policies and procedures that will enable the identification of interests or relationships between the firm or members of
engagement teams and clients
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• Using different partners and engagement teams with separate reporting lines for the provision of non-assurance
services to an assurance client
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• Timely communication of a firm's policies and procedures, including any changes to them, to all partners and
professional staff, and appropriate training and education on such policies and procedures
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• Advising partners and professional staff of assurance clients and related entities from which independence is required
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• Published policies and procedures to encourage and empower staff to communicate to senior levels within the firm any
issue relating to compliance with the fundamental principles that concern them
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may be solely or jointly responsible for the preparation and reporting of financial and other information, which both
their employing organizations and third parties may rely on
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0M and/ or annual revenue of at least P10
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In circumstances where a professional accountant in the business believes that unethical behavior or actions by others
will continue to occur within the employing organization, the professional accountant in business may consider obtaining
legal advice
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It refers to standards of moral conduct, behavior, and judgment in business
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❑ It is based on the personal values and standards of each person
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MIDTERM REVIEWER OF GOVERNANCE AE10

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covers all conduct, behavior, and judgment in business even acts that may be legal but which are wrong because they
violate ethical principles
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WORKPLACE
COMPLIANCE WITH
LABOR CODE

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Security of tenure
No employee shall be dismissed from work except for a just or authorized cause and only after due process
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fault of employee
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are economic circumstances that are not fault of employee
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10PM-6AM with night shift pay in addition to their salary
Exceeding 8 hours- overtime pay
Not all employees in Philippines are eligible for overtime pay due to specific exemptions outlined by the Labor Code
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amount paid to an employee in exchange for the service that they rendered to their employer
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Just Causes
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Workdays and work
hours

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Wage and wagerelated benefits
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Minimum age of
employment:

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Indirect
Misrepresentation

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Over-persuasion
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Corruption

INTEGRITY INITIATIVE
CAMPAIGN

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Hazardous- 18
Non-hazardous- 15
Any worker 15 years of age should be directly under the sole responsibility of parents or guardians provided that work
does not interfere with the child’s schooling or development
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Misrepresentation
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Direct Misrepresentation
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This includes: 1
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Misbranding or mislabeling
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Adulteration- debasing a pure or genuine commodity by imitating or counterfeiting it
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Measurement understatement
-omitting adverse or unfavorable information about the product or service
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Caveat Emptor “Let the buyer beware”
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Passive deception
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Prevention of Corruption
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Policy on Gifts and Entertainment
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Convenient Corruption Reporting System
• A multisectoral campaign that seeks to institutionalize integrity standards among various sectors of society- business,
government, judiciary, academe, youth, civil society, church, and media
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Goal: To build trust in government, a more equitable society, and fair market conditions
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Aspirational Values
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Accidental Values
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guide directors and
senior executives,
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ensure compliance

• or core values are the deeply ingrained principles that guide all employees of a company’s actions
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A set of rules that guides behavior
• Formal expression of the organization’s values and ethics
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as a minimum, to the practices necessary to maintain confidence in the organization’s integrity;
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with legal and other obligations to legitimate stakeholders

PERSONAL CODE OF CONDUCT
• Is profoundly personal and relates specifically to the person
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