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Introduction: Under the current economic circumstances, when the economy of each
country is a component of the global economy, the importance attached to production cost
information is constantly increasing. Enterprises should offer high-quality products on the
market for reasonable costs, in such a way as to ensure their future economic growth.
Nowadays, there are two accounting organization systems used worldwide:
- the integrated or monist system; m
- the non-integrated or dualist system.

The integrated accounting system requires the existence of a sole accountancy able to meet
the external as well as the internal information needs at the same time.

The non-integrated or dualist system, specific to Romania, proposes the organization of two
distinct types of accounting: the financial accounting and the management accounting,
autonomous from the functional point of view, but dependant from the informational point of
view. Unlike the annual accounts provided through the financial accounting, which are
standardized, the statements provided through the management accounting do not have this
feature. Thus, budgets, synthetic charts, reports, cash flow charts, as well as other situations
are influenced both in terms of form as well as in terms of contents, by the users’ information
needs and by the nature of the activity performed by the company.

Ethics in management accounting: Ethics is an important part of managerial

accounting, and companies follow a code of ethics or conduct that addresses ethical
issues/concerns for management accountants. The ethical dilemmas of managerial
accountants are increasing in response to big data, artificial intelligence and other
technologies. Ethical codes of professional organizations provide helpful guidance. Ethics
require accounting professionals to comply with the laws and regulations that govern their
jurisdictions and their bodies of work. Avoiding actions that could negatively affect the
reputation of the profession is a reasonable commitment that business partners and others
should expect. There are steps that can provide an outline for examining ethical issues:

 Recognize the ethical issue at hand and those involved (employees, creditors, vendors,
and community).
 Establish the facts of the situation (who, what, where, when, and how).
 Recognize the competing values related to the issue (confidentiality and conflict of
interest).
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 Determine alternative courses of action (do not limit yourself).

 Evaluate each course of action and how each relates to the values in step 3.
 Recognize the possible consequences of each course of action and how each affects
those involved in step 1.
 Make a decision, and take a course of action.
 Evaluate the decision.

Ethical principles: five principles of right behaviour that provide guidance for an
auditor’s behaviour are stated. The first principle, public interest, states that auditors stand to
serve the collective well-being of the public. The principle of Integrity requires that an
auditor maintains a work style that is factual and unbiased, and the principle of objectivity
says that the auditor must be free from conflicts of interest. Based on the proper use of
government information, the resources and position principle, auditors can’t obtain personal
benefits from these resources or use them to harm the audited organization. According to the
last principle, professional behavior, auditors must avoid conduct that brings disrespect on the
auditing profession.

Importance of ethics in management accounting: Due to the importance of the

information supplied, management accountants should observe certain professional ethical
standards. Professional management accountant organizations worldwide have developed
professional ethics standards. Setting professional ethical standards is important due to the
fact that: m
- they provide trust in the employee-employer relationship, m
- standards represent a reference for management accountants facing ethical dilemmas;
- they provide a guarantee to the information users that concerning the quality of the
information.
In the USA, in the opinion polls related to the ethics of the members of various professions,
accountants are systematically present on the first places. This proves the improvement in the
image of this profession. The Institute Management of Accountants (IMA) is the most
important management accountant professional organization in the USA. IMA developed
“Standards of Ethical Conduct for Management Accountants”. These standards require the
compliance with four basic principles: competence, confidentiality, integrity, and objectivity.
Management accountants have the obligation to improve on a continuous basis in order to
insure a high level of professional competence. Taking into account the nature of the
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information supplied by the management accounting, it is important to ensure its

confidentiality. Management accountants have the obligation not to communicate
confidential information; with the exception of the cases when they have the legal obligation
to do so. According to their position within the compartment, management accountants have
the obligation to inform their subordinates concerning the confidentiality of the information
obtained during work, and to supervise their subordinates’ compliance with these principles.
Management accounting practitioners must be incorruptible. They must avoid conflicts of
interests, and refuse presents or benefits that might influence their current or future actions.
The objectivity expected from management accountants is related to their obligation to
communicate the information correctly, objectively, even if this information is not in the
favour of those who requested it.

Ethical behaviour: There are four basic principles required by IMA`s ethical standards.

Competence Confidentiality

Ethical
Behavior

Integrity Credibility

Fig: The four basic principles required by IMA`s ethical standards.

The resounding bankruptcies occurred in the USA in the last decade have once again brought
to the forefront the aspects of professional ethics in the accounting field. Their role is to
support management accountants who encounter such problems in making a decision. In the
USA, the Institute of Management Accountants established special telephone lines for the
counselling, under the protection of anonymity, of management accountants confronted with
ethical problems for which they cannot find any solution. Higher educational institutions play
an important role in the cultivation of the values of professional ethics. Universities should
cultivate ethical values instead of allowing young specialists to acquire them on their own. In
the last decades, a new problem raised worldwide was that of the adaptation of the university
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curricula, by including aspects of professional ethics. Teaching staff in universities can

successfully use case studies and examples of reality to teach professional ethics. Students
must realize that in practical work they may face ethical dilemmas. They must understand
that ethics is the foundation of sustainable business. Company responsibility is not confined
to economic aspects but also include ethical, social and environmental aspects. More often
than not, the first criteria of young graduates looking for a job are the following: - the salary;
- other benefits offered by the employer; - possibilities to promote. The problems related to
the ethics of the employer are often on the last place. Some studies have analysed the change
in attitudes towards ethical issues. Cohen et all (2001) compared the ethical attitudes of
Canadian students and practitioners. The results showed that accounting professionals saw
some scenarios as less ethical than were considered by accounting students.

Influence factors: There are some factors that can influence ethical behaviours.

Table: Factors that may influence ethical behaviour of accounting practitioner.

Types Influence factors Role

Train management accounting
Universities professionals in terms of scientific
knowledge and ethical conduct
Educational Provide support to accountants, but
Professional organizations may also penalize those who do not
comply with the standards, and can
even exclude them from the
profession
Moral and religious Guide individuals’ conduct
reasons
The law Contains provisions that must be
observed and penalties for
Coercive infringements
Internal producers of the Guide employees’ behaviour in
company compliance with the legal provisions
and to the interests of the company
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Global commitment to ethics: The field of managerial accounting takes its role in
maintaining and upholding business ethics seriously. The International Federation of
Accountants, a global governing body, has a code of ethics that applies to managerial
accountants worldwide. The IFAC code outlines ethical responsibilities relating to areas such
as taxes, fees and commissions, advertising and solicitation. It also includes ethical guidelines
relating to integrity and objectivity, resolution of ethical conflicts, competence, and
confidentiality. IFAC ethical standards are mandatory requirements. If they are stricter than
the ethical requirements a country imposes, managerial accountants must abide by IFAC
ethical standards. The government spends a lot of public money every year, so it must find a
way to ensure responsible and honest use of public resources. Financial audit of a
government agency that uses public resources accomplishes this goal. Such audits
assess whether the information in the agency's financial records is fairly presented. The
relevant guidelines for such audits are provided by the U.S. Government Accountability
Office through its publication of generally accepted government auditing standards.

Implementing professional ethics at the workplace: The following are some of the
ways you can demonstrate good ethics in the workplace:

 Maintain personal dignity by wearing proper clothes, using proper language, and
practicing good manners.
 Be sincere and competent in your work. Make efforts to improve your efficiency.
 Be punctual. Any changes and delays in meetings or other programs must be
communicated to your counterpart without delay. Always apologize for unintentional
and unavoidable delays.
 Be courteous and respectful to superiors; and polite and gracious to your subordinates.
Be sensitive and considerate of other people.
 Be honest in your financial dealings. Do not use company resources for your personal
purpose. Do not accept bribes from, or get into any private deals with company clients
and suppliers. Do not inflate expenditures or submit fake documents. Do not tamper
with the accounts.
 Be pleasant and positive in your relationship with your colleagues. Be a good team
player. Appreciate other people’s achievements, and do not be jealous. Offer
constructive criticism and recommendations, only if considered necessary and
appropriate. Encourage and help others to do their best.
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 Accept criticism in a sporting manner. Pay attention to valuable advice and

constructive criticism, and make efforts to improve yourself.
 Do not avoid responsibilities, and dump your work on others. If any of your
colleagues has shared your work in case of an unavoidable emergency, be thankful,
and return the favour some other time. Do not participate in office gossip. Do not try
to victimize anyone else. Do not pry into, or interfere in the personal affairs of other
people.
 Make an effort to preserve the dignity of another. Keep confidences and maintain
confidentiality.

Ethical issues: Ethical capability is defined as ‘the ability to identify and respond
effectively to ethical issues, by making, implementing and managing ethical decisions
(particularly) when influenced, pressured or forced to do otherwise – either as an organisation
or as an individual.’ Based on interviews and questionnaire responses, the authors identify the
main ethical issues faced by accountants as:

 Misleading or inaccurate reporting, including inaccuracy, incompleteness and

questionable re-categorisation
 Fraud and tax evasion
 Lack of transparency in accounting decisions
 Breaches of confidentiality
 Misrepresenting expertise
 Overcharging fees or over-servicing clients
 Bribery. 

Problems: The sources of ethical problems can be: m

• the management’s expectations opposed to the principles of professional ethics; mm
• the desire to be promoted; m m
• the desire to earn money quickly; mm
• personal obligations or obligations of companions.

Solving ethical issues: Unfortunately, ethical dilemmas are common. To help curb the
desire to practice aggressive accounting and ignore ethical behaviour, a number of
organizations require accounting professionals to complete continuing professional education
courses on ethics. In addition, a number of companies establish whistle-blower hotlines to
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encourage employees to demonstrate honesty and integrity in the workplace. When

confronted with such dilemmas, an accountant needs to have the wherewithal to make
difficult yet principled decisions. If anyone finds he’s struggling with ethics here are four
steps he can take:

 Identify potential legal issues

 Take an outsider’s view
 Identify the parties affected
 Get professional advice.

Conclusion: Unlike external auditors, management accountants are employees of the

company and are paid by the company, and due to this aspect the company expects them to
be loyal. Managers who want to be appreciated by the Board of Directors may put pressure
on the accountant in order to make a facelift of the balance sheets. Many times, accountants
are tempted to give in to such pressures. Accountants have the obligation to present balance
sheets in which they should depict situation of the company with maximum accuracy, even if
this is not in favour of the management team or of the company itself. The ethical standards
developed by the IMA specify that “practitioners of management accounting and financial
management have an obligation to the public, their profession, the organization they serve,
and themselves to maintain the highest standards of ethical conduct”. Ethical standards
ensure information is reported in full and without bias whether the information is positive
or negative. Additionally, managerial accountants have access to sensitive business
information. Accountants who disclose or use internal information for personal gain can
destroy trust and set the business up for serious legal implications. Accounting ethics
ensure that managerial accountants can be trusted with sensitive business information.
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Reference:

 K.F. Alam, Ethics and Accounting Education, Teaching Business Ethics, Kluwer
Academic Publishers, Netherlands, 1999, pp. 261-272;
 J.R. Cohen, L.W. Pant and D.J. Sharp, The Effects of Gender and Academic
Discipline Diversity on the Ethical Evolutions, Ethical Orientation of potential Public
Accounting Recruits, Accounting Horizons, 1998, pp. 250-269;
 J.R. Cohen, L.W. Pant and D.J. Sharp, An Examination of Differences in Ethical
DecisionMaking Between Canadian Business Students and Accounting Professionals,
Journal of Business ethics 30, Kluwer Academic Publishers, Netherlands, 2001 pp.
319–336;
 H.Cristea, Contabilitatea şi calculaţiile în conducerea întreprinderii, (Accounting and
Calculations in the Company Management) 2nd Edition, CECCAR, Bucharest, 2003;
 R. Duska and B. S. Duska, Accounting Ethics, Blacwel Publishing, UK, 2004;
 R. Elias, The Impact of professional Commitment and Anticipatory Socialization on
Accounting Students Ethical Orientation, Journal of Business Ethics, 2006, pp. 84-90;
 C. Horngren, S. Datar, G. Foster, Cost Accounting: a Managerial Emphasis, 11th
edition (Romanian edition), Arc Publishing House, Chişinău, 2006;
 T. Moşteanu and co-authors, Preţuri şi concurenţă, (Prices and Competition)
University Publishing House, Bucharest, 2006;