PRESENTED BY MS. MNZAVA, E.

MY DEAR STUDENTS, PLEASE REMEMBER TO

SHUT OFF YOUR MOBILE/MUTE.
TOPIC 3: PROFESSIONAL ETHICS IN CORPORATE GOVERNANCE
 Meaning of Ethics

 Ethics is the discipline concerned with what is morally good

and bad and morally right and wrong.
 Ethics is regarded as the benchmark on how individual in

any organization should act.

NB: If the action of employees follows ethical path then the

goals of organization will be achieved easily.
Ethical Theories
 Ethical Theories

 Kantianism (ethics of duty)

 The theory believe that the right or wrong is not caused

by consequence of action but set of existing

principles.
 The action should follow intentions that are the

universally acceptable.
 Ethical Theories

 Utilitarianism
 The theory states that the action is considered to be right if it
result in the greatest amount of happiness to greatest amount
of people affected by those action.
 NOTE:

Theory assume that the happiness can be measured.

 Professional Code of Ethics

 “A professional code of ethics is a guide designed to ensure

employees are behaving in a manner that is socially
acceptable and respectful of one another” (Herrity 2022).
 It establishes the rules for behavior and sends a message to

every employee that universal compliance is expected.

 Professional Code of Ethics in Corporate Governance

 Professional ethics in corporate governance encompasses the moral

principles and standards that guide the behavior of individuals
and organizations in the corporate environment.
 IMPORTANCE:
 Ensures transparency, accountability, and integrity in corporate
decision-making.
 Builds trust among stakeholders, including shareholders,
employees, and the community.
 Promotes sustainable business practices that consider social and
environmental impacts.
 Who Regulate Behaviors?

REGULATORY AUTHORITIES
 Bank of Tanzania (BoT):

 Responsible for regulating and supervising the banking sector.

 Establishes guidelines and regulations to promote ethical practices and financial
stability.
• Capital Markets and Securities Authority (CMSA):
• Regulates and oversees the capital markets in Tanzania.
• Ensures compliance with ethical standards and promotes transparency in
securities transactions.
 Who Regulate Behaviors?

PROFESSIONAL ASSOCIATIONS
 National Board of Accountants and Auditors (NBAA):

• Regulates the accounting profession in Tanzania.

• Sets ethical standards and codes of conduct for accountants and auditors.
 Tanzania Institute of Bankers (TIOB):
 Promotes the banking profession in Tanzania.
 Provides training, resources, and ethical guidelines for banking
professionals.
 Who Regulate Behaviors?

 CORPORATE GOVERNANCE FRAMEWORKS

• Role of the Board of Directors:
• Responsible for setting the ethical tone at the top.
• Implements corporate governance policies to uphold ethical standards.
• Ethics Committees:
• Oversee compliance with ethical standards.
• Address any ethical issues that may arise within the organization.
 Who Regulate Behaviors?

 INTERNAL POLICIES AND CODES OF CONDUCT

• Corporate Codes of Ethics:
• Developed by banks and accounting firms to outline expected ethical
behaviors.
• Include guidelines on conflicts of interest, confidentiality, and professional
integrity.
• Whistleblower Protection Policies:
• Encourage employees to report unethical behavior without fear of retaliation.
• Provide safe mechanisms for reporting unethical conduct.
 Who Regulate Behaviors?

 External Auditors
• Independent Auditors
• Conduct audits of financial statements for banks and companies.
• Ensure compliance with accounting standards and regulations.
• Help maintain ethical standards in financial reporting and practices.
 Fundamental Principles

 International Federation of Accountants (IFAC) set five

(5) principles that auditors and accountants should follow.
The principles are as follows;
 Integrity
 Objectivity
 Professional competence and due care
 Professional behavior
 Confidentiality
 INTERGRITY

 Members should be straightforward and honest in all professional and

business relationships. Integrity implies not just honesty but also fair
dealing and truthfulness.
 The professional accountant shall not knowingly be associated with
reports, returns, communication or other information where accountant
believe the information;
 Contain material misstatement
 Omit information would mislead user of information

 If accountant provide a modified report it should not be considered as

breach of integrity.
PROFESSIONAL COMPETENCE AND DUE CARE

 Members have a duty to maintain their professional knowledge and

skill at such a level that a client or employer receives a competent
service, based on current developments in practice, legislation and
techniques.
 Members should act diligently and in accordance with applicable
technical and professional standards.
 Professional Behavior

 Members should comply with relevant laws and regulations and

should avoid any action which discredits the profession.
 They should behave with courtesy and consideration towards all with
whom they come into contact in a professional capacity.
 The accountant should not knowingly engage in any business or
activity that impairs the reputation, integrity and objectivity of
profession.
 CONFIDENTIALITY

 Members should respect the confidentiality of information acquired as

a result of professional and business relationships and should not
disclose such information to third parties without authority or unless
there is a legal or professional right or duty to disclose.
 Confidential information acquired as a result of professional and
business relationships should not be used for the personal advantage
of members or third parties.
 CONFIDENTIALITY

 The public interest is an abstract notion.

 Asserting that an action is in the public interest involves setting oneself
up in judgement as to whether the action or requirement to change
behaviour will benefit the public overall a far greater set of people
than can be interacted with directly.
 CONFIDENTIALITY

 Confidentiality requires members to refrain from disclosing information

acquired in the course of professional work except where:
 Disclosure is permitted by law and is authorised by the client or the employer
 Disclosure is required by law, for example: documents or other provision of
evidence in the course of legal proceedings.
 There is a professional duty or right to disclose, when not prohibited by law to
protect interest of profession interest, responding to inquiry from regulatory body
or comply with technical standards.
 OBJECTIVITY

 Members should not allow bias, conflicts of interest or undue

influence of others to override their professional or business
judgments.
 The professional accountant should not undertake a professional
activity if a circumstance of unduly influence exist.
 OBJECTIVITY

 Conflicts of interest; occurs when an entity or individual becomes

unreliable because of a clash between personal (or self-serving)
interests and professional duties or responsibilities.
 Such a conflict occurs when a company or person has a vested interest
such as money, status, knowledge, relationships, or reputation
which puts into question whether their actions, judgment, or decision-
making can be unbiased.
 OBJECTIVITY

 Objectivity is a state of mind but in certain roles the preservation of objectivity

has to be shown by the maintenance of independence from those influences
which could impair objectivity
 Independence of mind: The state of mind that permits the provision of an
opinion without being affected by influences that compromise professional
judgment.
 Independence in appearance: The avoidance of facts and circumstances that
are so significant that a reasonable and informed third party, having knowledge
of all relevant information, including safeguards applied, would reasonably
conclude a firm's, or a member of the assurance team's, integrity, objectivity or
professional skepticism had been compromised
 OBJECTIVITY

 Professional skepticism
 Professional skepticism is an attitude that includes a questioning mind
and a critical assessment of audit evidence.
 The auditor uses the knowledge, skill, and ability called for by the
profession of public accounting to diligently perform, in good faith
and with integrity, the gathering and objective evaluation of evidence.
Today’s quote
“The roots of education are
bitter, but the fruit is SWEET”

NOTE: Dear student, please

remember to attend your
respective tutorial sessions!
Be blessed great minds!