 Hello and welcome to the session in which we'll discuss the IMA ethical standards. Well, what is IMA? That's the first thing we need to learn about and that's the Institute of Management Accountant. It's a Worldwide Association of Accountant and Financial Professional. If you want to learn more about the IMA, I suggest you visit their website, imanet.org. The purpose of the organization is basically the advancement of management accounting profession. That's the organization that administer the CMA exam. The highest managerial accountant or management accounting certification you can earn. And many people opt for the CMA rather than the CPA. If you want to learn more about the CMA, I suggest you visit the website. So the IMA standard of ethical conduct is a practical guide. It's basically a guide in dealing with ethical standard issue in managerial accountant. So if you're a managerial accountant and you want to know what should I deal with this issue, it's basically a guide for ethical behavior. It tells you what to do or what not to do. Also, in this session, we would look at the resolution for ethical conflict. In case you are a management accountant and you had an ethical dilemma in your company, you don't know what to do. You don't know what's the right thing to do. Well, guess what? We're going to look at resolution of what you should follow in dealing with those situations. Now, there are four standards of IMA ethical standards. The four standards are competency, confidentiality, integrity, and credibility. And if you know anything about Professor Farhad once I have a list, I'm going to go over each component of this list explaining the concept separately. Starting with competency. What is competency? If you want to replace competency with one word, that's knowledgeable. That's what competency is. What does that mean? It means maintaining an appropriate level of professional leadership and expertise by enhancing knowledge and skills. Now, how do you enhance your knowledge and skills? Well, guess what? You can attend continuous professional education or what we call CPEs in the profession. You can attend seminars. You can buy books, learn about the topics, learn new skills, technology, business analytics, big data, whatever the topic is. Make sure you stay up to date to keep up your expertise. So that's the first thing you have to be competent. Also, when you perform your professional duties, they have to be according to relevant laws. You're following laws. You are following regulation and you are following technical standard, which is, for example, you want to make sure if you are reporting for external users, you are following gap. Now, also the company themselves, they will have their own rules and regulation. You want to make sure you follow this. So be knowledgeable and follow the rules. That's basically what we are saying in one and two. And the third element of the competency is you want to provide decision support information and recommendation that is correct, accurate, clear. People can understand it, concise. They know exactly what to do and obviously timely. And all this information is needed to recognize and help management in managing the risk of the company. That's your job. You're the competent. You are the person that's being trusted. So provide the information appropriately. Before we proceed any further, I would like to remind you whether you are a student or a CPA candidate to take a look at my website farhatlectures.com. If you've taken this course for your managerial accounting, I do have a managerial accounting course that's going to include lectures, multiple choice through false. That's going to help you tremendously, including some exercises in passing your managerial accounting course. If you're studying for the CMA exam, I do have supplemental material. And if you happen to be a CPA student or taken some other accounting course, I do have resources for those courses as well. If you have not connected with me on LinkedIn, please do so. Take a look at my LinkedIn recommendation like this recording. Share it with other. Connect with me on Instagram, Facebook, Twitter and Reddit. The second concept or the second principle is confidentiality. And simply put, what is confidentiality? It means keep the information private. As management accountant, you're not supposed to disclose any confidential information unless you are legally obligated to do so. What if the judge asks you to do so? If there is a legal inquiry, then you have to disclose it. Otherwise, do not disclose it. Also, do not use the confidential information, confidential information. Why confidential information? Management accountant, they have access to inside information, information that public don't know. The public know what you issued in the financial statement. But management accountant might know plans that's ongoing at the company right now, like the how many orders they have in the pipeline. Are they planning to make a new purchase? Are they planning to expand? So that's personal information. You don't want to take advantage, personal advantage of this personal information like trading. If you know the company is doing well, the stock price is going to go up before they report. You don't want to buy the stock. That's inside information. Let's assume you know the company wants to expand in a city or in an area. Well, you will tell your relative to go ahead and make purchases by land, by property in that area before that decision is made public. That's called using confidential information for personal advantage. You don't want to do that. Also, you want to ensure that subordinates, people who are underneath you do not disclose this information. You may not want to do it, but also you want to make sure that the people who are working underneath you are aware of this policy as well. They may not be CMAs, but it's your responsibility to monitor this process as a CMA. Also inform all relevant parties regarding the appropriate use of confidential information. If you happen to give confidential information for someone inside the company, you want to let them know this is confidential and monitor to ensure that they are complying with the confidentiality that it's expected of you as well. Also, you have to have integrity. That's the third principle. And what is integrity? Do what's right when no one is looking. Always do the right thing. What does that mean? Well, refrain from activities, obviously illegal activities that could discredit the profession because if you're a CMA and you perform some illegal activity, especially on job but also off job, that's going to discredit the profession because you are presented as the face, as a member of that organization. Avoid conflict of interest and advise others of potential conflict of interest. Well, what is conflict of interest? It means there are two options. One is if you take option A, you're going to benefit yourself. Option B, it's going to benefit the company. You should always avoid that conflict of interest and you work for the company. Avoid that. Refuse gift because what's going to happen if you receive gift from a client or from someone, now you are basically subordinating your integrity to that individual. So in other words, you might start to, they might start to influence your behavior if they give you gift. So you don't want to do that. Maintain your integrity. Also contribute to a positive ethical culture. Act, act, act in an ethical way in front of everyone and place in the integrity of the profession above personal interests. So if you have to choose between your personal interest and the company or the profession, you want to choose the profession or the company themselves. So avoid activities that could affect your ability to perform duties. Simply put, act ethically. Avoid conflict of interest. Then you have nothing to worry about. Also communicate unfavorable as well as favorable information. That's important. Don't hide unfavorable information and only report favorable information. You have no integrity. And if you have integrity, you should have credibility. And that's the fourth principle. What is credibility? It's how people judge the quality of your judgment. Are you trusted when you report something? Are you going to be trusted? What increases? What enhances your credibility? Well, you have to communicate the information fairly and objectively. You have to tell people all the information in an objective way. Don't hide information. Don't try to put a spin on it so it loses its value and provide all relevant information. Don't exclude anything that could reasonably be expected to influence the intended user. So don't avoid something because if you avoid it, the users, the person that you are giving the information could change their mind. You got to give them all the relevant information. And if there's any delays, report any delays or deficiency in information. If you cannot report the numbers, just say we can't report the numbers. If there's any deficiency, the information is missing something. Let them know. This is what we mean by all relevant information. Make sure you are reporting this on a timely basis. Also, if there's any problem with the internal control, make sure you report this in conformance with the organization, policy and applicable laws. And also communicate any professional limitation. If you don't have an expertise in a certain topic, you have to let the users know about this. That's a limitation or any constraint. You could not get the information because there is no way we can count the inventory now. Well, you got to let them know that's the situation. So all of these four standards are basically very general. But they give you an idea when you are faced with an ethical dilemma. So how do you how do you resolve if you are faced with an ethical dilemma? Again, those are very, very general rules. One, most likely the organization will have their own policies and procedures. If there's an ethical dilemma, first, follow the organization, establish policies and procedures. Two, discuss the ethical issue with your immediate supervisor unless that person is involved. In other words, if the person is involved in that ethical dilemma, you don't want to discuss it with them because now you're not being objective. They're not being objective. You might be under undue pressure because they're people above you. So go a level above them unless, again, unless they're not involved. Then you have to speak to your immediate supervisor. You might hope to go to a higher level if they are involved. You might want to talk to the CEO, the audit committee, depending on what the situation is. Also, the IMA has a hotline. If you have a question, if you remember, you can call them, tell them this is the situation. It's anonymous. What should I do under those circumstances? You can discuss this with the counselor and you could always consult with an attorney, with your own attorney in case there are legal issues involved. So those are steps in resolving ethical issues. Once again, this topic is covered in an introductory managerial accounting course. What should you do now? Subscribe to my managerial accounting course. 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