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In step with IMA's stance on ethical issues, corporate ownership is giving more prominence to the quality of the ethical culture in organizations. BY CURTIS C. VERSCHOOR, CMA, CPA
IMA® (Institute of Management Accountants) has long considered an organization's ethical culture to be significant and includes "advocacy of the highest ethical and best business practices in management accounting and finance" in its mission statement. The recently revised IMA Statement of Ethical Professional Practice adds a new Integrity requirement for IMA members to "contribute to a positive ethical culture." It's no longer acceptable for members to remain silent when observing an unethical or illegal act being committed. The newly revised Competence standard also adds a requirement for members to "recognize and help manage risk," which includes reputation risk.
The culture or DNA in an organization is a key aspect of good governance in legal, ethical, and operational terms. It drives the decisions, behavior, and systems in the organization. For example, Section 882.1 of the U.S. Federal Sentencing Guidelines describes elements of an effective ethics and compliance program as requiring an organization to "promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law" In operational terms, an unethical culture is widely blamed for causing the unauthorizedaccount scandal at Wells Fargo, the meltdown at Uber, and the widespread accusations of sexual harassment, particularly in the motion-picture industry.
A strong ethical culture leads to many favorable strategic outcomes, including greater efficiency and employee productivity resulting from shared organizational core values. These benefits fall directly to the bottom line and can attract superior employees, reduce turnover, and achieve a lower cost of...