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Between a rock and a hard place

South African Institute of Professional Accountants
17 June 2020

We all face ethical dilemmas during our lives, but for the professional, the stakes are particularly high.
By Shahied Daniels, CEO: South African Institute of Professional Accountants (SAIPA)

We all make choices every day, from the trivial (“What coat shall I wear?”) to the significant (“Should I take advantage of this loophole in the accounting system?”). Many choices have no right or wrong answer, or there is clearly a right one. But then there’s the ethical dilemma which, strictly speaking, is a dilemma in which either each alternative is “right”, or each will compromise an ethical principle. 

It is not called “the horns of a dilemma” for nothing—making the right choice can be excruciatingly difficult.

Ethical dilemmas are relatively rare in personal life but, in professional life, they crop up more frequently. Professionals must balance the ethics of their profession, serving the interests of the public and serving the interests of the client.

One can distinguish several different types of common ethical dilemma. One is when ethics derived from one’s culture or beliefs conflict with legislation—this is likely when laws are unjust, or in multicultural societies where the law is based on one set of cultural or religious precepts. This can lead to a conflict between personal morals, laws or regulations, and professional ethics codes.

During the Level 5 lockdown, many individuals and organisations faced an acute ethical dilemma because of the prohibition on supply cooked food to the needy. Similarly, nurses often had to choose between allowing a COVID-19 patient to receive visits from family members and the need to keep the infected individual isolated.

Another common type of ethical dilemma relates to industry practices. A Professional Accountant might work in, say, the oil and gas industry and become habituated to the accepted codes of behaviour and regulation in that industry, and then shift industries only to find that some of these are not accepted in the new environment, or are indeed contrary to industry-specific regulations.

The same might occur even when moving between companies within the same industry.

A topical ethical dilemma could concern the CFO of a government department being asked to bypass payment or tender procedures to facilitate the swift rollout of an urgently needed social relief programme.

An important factor that complicates ethical dilemmas is that the added complication that one has to engage with the ethics of other stakeholders. For Professional Accountants in particular, a significant and common dilemma relates to assessing the integrity and materiality of the information supplied to them by clients.

Making the choice
So, when trying to navigate the correct choice between two conflicting ethical courses, how should one proceed? There are some useful rules of thumb, the first of which is the legal test. Is a law going to be broken? If so, the choice is between a law, which can be enforced, and a moral code, which cannot. If the option you choose is legal, then there are other tests to apply. Does it carry the stench of corruption? Would you be happy to see your choice being communicated on a billboard or the front page of a news site? And, finally, what would another person who values and cares for you think about your choice—your parent or spouse, for example?

Those who are bound by professional codes of conduct, such as Professional Accountants (SA) also have the benefit of an official code of ethics to help guide them. It can also be extremely useful to speak to fellow professionals or a fellow member of your professional association.

When confronting an ethical dilemma, one could argue that the principle embodied in the Business Judgment Rule could be helpful. The Rule is used to protect directors from liability or censure if a decision they take later proves to have been faulty. Fundamentally, the Rule provides directors with a “safe harbour” if they can show that they took all reasonable steps to inform themselves and properly applied their minds to all the factors before making their decision—in other words, that they acted competently as directors and in good faith for the benefit of the organisation based on the information before them.

Professionals confronting a tricky ethical question could well make use of the same principle. In the end, because an ethical dilemma is ultimately about choosing between two “right” choices, the best one can do is make the decision as rationally as possible, taking everything into account and taking all reasonable steps to ensure the most appropriate outcome in the circumstances. In addition, professionals would be well-advised also to keep a record of the decision-making process they followed so that it their choice is later questioned, they can demonstrate the process they followed in arriving at it.