1
00:00:05,640 --> 00:00:07,380
Hey, everyone. Welcome
back to Count Me In,

2
00:00:07,950 --> 00:00:11,220
IMA's podcast about all things affecting
the accounting and finance world.

3
00:00:12,000 --> 00:00:12,930
I'm your host Mitch Roshong.

4
00:00:13,470 --> 00:00:17,160
And today I will be previewing a
special bonus episode in our series.

5
00:00:18,420 --> 00:00:20,580
October 20th is global ethics day,

6
00:00:21,000 --> 00:00:24,960
a day created by the Carnegie council
for ethics in international affairs.

7
00:00:25,920 --> 00:00:29,880
Global ethics day is an annual moment
to empower ethics through the actions of

8
00:00:29,881 --> 00:00:31,530
individuals in organizations.

9
00:00:32,070 --> 00:00:35,430
It takes place annually on the
third Wednesday of every October,

10
00:00:36,570 --> 00:00:39,270
ethics lies at the heart of the
management accounting profession,

11
00:00:39,390 --> 00:00:43,320
and IMA considers ethics to be
foundational to its work in core values.

12
00:00:44,160 --> 00:00:47,400
For this special count me in
podcast, in honor, of this day,

13
00:00:47,760 --> 00:00:50,160
we are delighted to have IMA's CFO,

14
00:00:50,190 --> 00:00:54,090
Russell Porter discuss why ethics
is so important to management,

15
00:00:54,091 --> 00:00:56,880
accounting and financial
oversight for organizations.

16
00:00:58,050 --> 00:01:00,900
IMA's manager of brand
content and storytelling,

17
00:01:00,930 --> 00:01:05,010
Margaret Michaels will ask for us
to share his experiences working in

18
00:01:05,011 --> 00:01:05,940
management, accounting,

19
00:01:06,420 --> 00:01:10,260
some of the ethical dilemmas that can
arise and how he learned to navigate

20
00:01:10,261 --> 00:01:14,310
questions around ethics to steer the
organizations he has worked for in the

21
00:01:14,311 --> 00:01:15,144
right direction.

22
00:01:15,810 --> 00:01:19,650
Russ will also provide information on
IMA resources that are available to

23
00:01:19,651 --> 00:01:22,590
members who want to learn
more about navigating ethics.

24
00:01:23,250 --> 00:01:25,560
So to hear more about
this very important topic,

25
00:01:25,830 --> 00:01:28,440
let's head over and listen
to their conversation now.

26
00:01:34,430 --> 00:01:36,740
So welcome Russ to IMA's Count Me In.

27
00:01:37,190 --> 00:01:41,420
We are so happy you could join us for
this special and important episode.

28
00:01:41,750 --> 00:01:43,580
Pleasure to be here,
Margaret, and, thanks for,

29
00:01:43,581 --> 00:01:47,300
initiating this discussion about ethics.
It's a personal favorite topic of mine.

30
00:01:48,470 --> 00:01:52,820
I know you are very interested in
helping IMA members navigate ethical

31
00:01:52,821 --> 00:01:56,000
questions and issues they
face every day in their work.

32
00:01:56,480 --> 00:02:01,430
You even did an unscientific LinkedIn
poll asking what the most important ethics

33
00:02:01,431 --> 00:02:04,670
issue facing accounting and
finance professionals today is.

34
00:02:04,730 --> 00:02:07,070
What did you find out?

35
00:02:07,071 --> 00:02:10,250
And what do you believe is the
most pressing issue they face?

36
00:02:11,090 --> 00:02:15,590
Yeah, it's funny, Margaret.
Unsurprisingly, I did not
get a lot of responses.

37
00:02:15,650 --> 00:02:18,680
And a lot of the ones I did get
were in one-to-one messages,

38
00:02:18,681 --> 00:02:21,590
as opposed to being on the
LinkedIn message board.

39
00:02:22,490 --> 00:02:26,840
Ethics is one of those areas that
people often don't like to talk about.

40
00:02:27,350 --> 00:02:32,150
Despite the fact that we read about
issues of ethical lapses in the papers all

41
00:02:32,151 --> 00:02:34,520
the time, that said,

42
00:02:34,610 --> 00:02:37,790
when you look for them around
any business environment,

43
00:02:38,210 --> 00:02:39,770
you'll see plenty of ethical issues.

44
00:02:40,700 --> 00:02:44,570
Most of them are addressed right
up front in a company's culture,

45
00:02:45,170 --> 00:02:48,110
but when the ethical component
of culture isn't strong enough,

46
00:02:48,620 --> 00:02:52,190
the temptation to overlook
principles can overwhelm people.

47
00:02:53,600 --> 00:02:57,770
Keep in mind, also there are, in my
mind, two types of ethics to consider:

48
00:02:58,310 --> 00:02:59,860
the macro and the micro.

49
00:03:00,850 --> 00:03:05,560
The micro is the one people often think
about where an individual or a small

50
00:03:05,561 --> 00:03:10,210
group has to make a decision between
the right way and the wrong way as if

51
00:03:10,211 --> 00:03:11,680
decisions were that black and white,

52
00:03:12,700 --> 00:03:16,750
but there are also macro ethical
issues like sustainability,

53
00:03:17,110 --> 00:03:19,240
equitable treatment, proper governance,

54
00:03:19,990 --> 00:03:22,240
those are affected by
individual decisions,

55
00:03:22,270 --> 00:03:24,760
but they can often have
a much wider impact.

56
00:03:25,660 --> 00:03:26,530
Yes, I agree.

57
00:03:26,531 --> 00:03:31,030
I think we are seeing those wider
impact issues around us every day.

58
00:03:31,480 --> 00:03:34,930
I know that I am much more
aware of those macro issues.

59
00:03:34,990 --> 00:03:39,040
And I do think that business has really
been stepping up to the plate to try to

60
00:03:39,041 --> 00:03:43,840
address public concerns related to
the climate or income inequality or

61
00:03:43,841 --> 00:03:48,370
gender bias or racial injustice
through their work on sustainability.

62
00:03:48,850 --> 00:03:53,710
In this way, sustainability really
has an ethical dimension beyond just

63
00:03:53,711 --> 00:03:55,600
reporting non financials.

64
00:03:56,080 --> 00:04:00,970
Is this a change you welcome in the
profession and how does sustainability

65
00:04:01,570 --> 00:04:05,560
change the paradigm for accounting and
finance professionals from an ethical

66
00:04:05,561 --> 00:04:06,394
perspective?

67
00:04:07,120 --> 00:04:08,140
So Margaret,

68
00:04:08,170 --> 00:04:12,160
all those items you just mentioned
under the umbrella of sustainability

69
00:04:12,760 --> 00:04:16,780
economists call them
externalities because in theory,

70
00:04:16,840 --> 00:04:21,520
these are effects that don't directly
impact an organization making the

71
00:04:21,521 --> 00:04:23,980
decision. And for that reason,

72
00:04:23,981 --> 00:04:28,870
management accountants often
exclude sustainability issues from

73
00:04:28,930 --> 00:04:31,090
a relevant cost benefit analysis.

74
00:04:32,020 --> 00:04:35,350
That idea of what costs are
relevant to an organization.

75
00:04:35,710 --> 00:04:39,880
It's really been expanding
though, in the eyes of consumers,

76
00:04:40,150 --> 00:04:41,890
regulators, and investors,

77
00:04:42,610 --> 00:04:46,000
they're all taking those elements into
account when making their buying or

78
00:04:46,001 --> 00:04:50,920
investing decisions as society
increases the focus on those areas,

79
00:04:51,340 --> 00:04:55,780
through the lens of ethical treatment
of the planet and society, accountants,

80
00:04:55,781 --> 00:04:57,700
ignore those issues at their peril.

81
00:04:59,170 --> 00:05:01,480
I would also point out that, you know,

82
00:05:01,490 --> 00:05:05,230
perspectives on some of these macro
ethical issues can vary greatly.

83
00:05:05,950 --> 00:05:10,360
Different cultures, whether those
cultures are based upon geography,

84
00:05:10,510 --> 00:05:14,710
religion, political affiliation,
or any other factor,

85
00:05:15,220 --> 00:05:18,130
they'll interpret an ethical
approach to issues differently.

86
00:05:19,030 --> 00:05:21,460
Now exploring these
different perspectives,

87
00:05:21,790 --> 00:05:26,230
that can really be valuable in increasing
our understanding of the topics.

88
00:05:27,040 --> 00:05:31,540
But it's really important to be aware
of how the societies in which we

89
00:05:31,600 --> 00:05:35,680
operate view these issues.
For an management accountant,

90
00:05:35,980 --> 00:05:38,860
that perspective and that
understanding - that's crucial.

91
00:05:39,820 --> 00:05:44,800
Those macro ethical issues do have
many dimensions and awareness of that

92
00:05:44,801 --> 00:05:48,130
fact is critical for the
accounting and finance profession,

93
00:05:48,190 --> 00:05:50,080
as well as society at large.

94
00:05:50,710 --> 00:05:55,570
And since we're on the topic of macro
issues and changes affecting society,

95
00:05:55,660 --> 00:05:59,750
I think it's a good time to up something
that has literally transformed the

96
00:05:59,751 --> 00:06:04,550
profession, which is technology
and digitization. At IMA,

97
00:06:04,821 --> 00:06:09,230
we are acutely aware of how
technologies like automation, AI,

98
00:06:09,290 --> 00:06:13,460
and data analytics have changed the
way management accountants work.

99
00:06:14,960 --> 00:06:17,270
Upskilling in technology
is something we champion,

100
00:06:17,780 --> 00:06:20,960
but while the technical skills involved
with these technologies are significant,

101
00:06:20,961 --> 00:06:23,840
so are the ethical questions.

102
00:06:24,230 --> 00:06:27,860
What is your view of technology
from an ethics perspective?

103
00:06:28,940 --> 00:06:31,460
So Margaret, digitization,

104
00:06:31,520 --> 00:06:33,980
it's not just affecting
the accounting profession,

105
00:06:34,040 --> 00:06:38,750
it's affecting almost every element
of our lives and in society today.

106
00:06:39,410 --> 00:06:43,400
And there's a lot of good that comes
out in terms of both individual,

107
00:06:43,401 --> 00:06:47,030
as well as societal welfare. That said,

108
00:06:47,420 --> 00:06:50,750
the application of technology,
if not done well. Well,

109
00:06:50,780 --> 00:06:55,370
that can also exacerbate existing
tendencies to a detrimental

110
00:06:55,371 --> 00:06:57,320
effect. For example,

111
00:06:57,470 --> 00:07:00,470
we've been hearing the term
algorithmic bias lately,

112
00:07:02,000 --> 00:07:06,740
and that is the propensity for
technology driven algorithms to lock

113
00:07:06,770 --> 00:07:10,640
in the biases of maybe the
people who designed them,

114
00:07:11,090 --> 00:07:15,920
or maybe the data sets
that were used to create

115
00:07:15,980 --> 00:07:19,160
baseline information on
which those algorithms rely.

116
00:07:20,810 --> 00:07:23,870
Critics would point to areas that
we've been hearing about in the news,

117
00:07:24,140 --> 00:07:28,850
like resume filtering, neighborhood
profiling and banking and loans,

118
00:07:29,270 --> 00:07:34,100
or even facial recognition
as emerging applications that

119
00:07:34,101 --> 00:07:37,940
can perpetuate inappropriate biases. Now,

120
00:07:38,300 --> 00:07:43,250
ethics enters into the equation as does
management accounting in the design and

121
00:07:43,251 --> 00:07:47,870
the testing of these applications to
make sure that they produce appropriate

122
00:07:47,930 --> 00:07:52,640
truly unbiased results. That's where the
management accountant can be of value.

123
00:07:53,060 --> 00:07:57,590
Our profession can review and
"audit" these types of technologies

124
00:07:58,070 --> 00:08:02,480
to ensure that they provide those
unbiased answers the same way we

125
00:08:02,481 --> 00:08:07,370
apply our bias reviews to
financial forecast and analysis.

126
00:08:08,390 --> 00:08:11,930
That's interesting. I never thought
about auditing a technology,

127
00:08:11,931 --> 00:08:16,670
but it makes perfect sense in light of
technology's pervasiveness and impact on

128
00:08:16,671 --> 00:08:20,630
our lives. It does sound like the
perfect job for a management accountant.

129
00:08:21,320 --> 00:08:26,000
I wonder with COVID-19 and the
rapid shift to remote work that many

130
00:08:26,001 --> 00:08:29,540
organizations had to quickly
enable with technology,

131
00:08:29,960 --> 00:08:34,190
what new ethical issues and
risks are arising. For instance,

132
00:08:34,191 --> 00:08:39,050
a recent IMA and ACCA survey
found that one in five management

133
00:08:39,051 --> 00:08:43,400
accountants has directly or via
work colleague encountered a

134
00:08:43,401 --> 00:08:46,730
situation where as a result of COVID-19,

135
00:08:47,180 --> 00:08:49,400
ethics were at risk of compromise.

136
00:08:49,790 --> 00:08:54,140
And these ethical dilemmas also come
at a time when society at large is

137
00:08:54,141 --> 00:08:58,590
experiencing declining levels of
trust in government, the media,

138
00:08:58,860 --> 00:09:01,140
and look to business to lead by example,

139
00:09:01,230 --> 00:09:04,710
according to the Edelman
2021 trust barometer.

140
00:09:05,250 --> 00:09:09,360
With so much weight being placed on
management accountants and businesses in

141
00:09:09,361 --> 00:09:11,460
particular, to do the right thing,

142
00:09:11,790 --> 00:09:16,680
how can CFOs build a culture of trust
within and outside their organizations?

143
00:09:17,070 --> 00:09:21,720
What kinds of support do they need to
do this? And in addition to finance,

144
00:09:21,750 --> 00:09:24,840
what other departments are
critical to building trust?

145
00:09:25,460 --> 00:09:29,310
That's a surprising statistic. The one
in five management accountants facing

146
00:09:31,261 --> 00:09:33,840
an ethical compromise issue.

147
00:09:34,080 --> 00:09:37,890
Now COVID may have exacerbated this
trend, but, you know, candidly,

148
00:09:37,891 --> 00:09:41,490
the pressure on individuals
has always been there,

149
00:09:41,491 --> 00:09:45,300
whether it's protecting a company's
stock price, making sure that, you know,

150
00:09:45,301 --> 00:09:49,440
trying to protect the company's
reputation or even one's own compensation.

151
00:09:49,470 --> 00:09:54,210
There's always a reason for
accountants and other managers

152
00:09:54,211 --> 00:09:55,860
to manipulate, reporting,

153
00:09:56,160 --> 00:10:00,480
or hide negative information that
might blemish the company or otherwise,

154
00:10:00,481 --> 00:10:05,040
you know, mislead investors,
clients, regulators, inappropriately.

155
00:10:06,420 --> 00:10:08,190
Now there's always that pressure,

156
00:10:08,850 --> 00:10:13,530
but most companies effectively reinforce
their ethical principles to counteract

157
00:10:13,531 --> 00:10:16,800
that pressure. And that comes
from a series of measures.

158
00:10:17,130 --> 00:10:21,510
We we've all heard about tone at the top
and lately there's been an emphasis on,

159
00:10:21,690 --> 00:10:26,010
you know, the mood in the middle
where middle managers echo and

160
00:10:26,940 --> 00:10:29,010
reinforced the ethical
standards of an organization,

161
00:10:30,120 --> 00:10:34,470
but really it does matter
what leaders do and how they

162
00:10:34,471 --> 00:10:39,060
demonstrate their own responses,
both to the pressure to perform,

163
00:10:39,600 --> 00:10:44,310
but also to identify unethical
behavior in their firms when it arises.

164
00:10:45,450 --> 00:10:48,090
CFOs, we've got a lot of influence here,

165
00:10:48,690 --> 00:10:52,380
but we've also got support
from legal, internal audit,

166
00:10:52,710 --> 00:10:54,720
external auditors, regulators,

167
00:10:55,260 --> 00:10:59,220
and the general public who are going
to hold companies and organizations

168
00:10:59,221 --> 00:11:01,770
accountable for their ethical lapses.

169
00:11:03,090 --> 00:11:07,260
The best ally we have though
in most organizations is the

170
00:11:07,261 --> 00:11:09,690
CEO and the line management team.

171
00:11:10,560 --> 00:11:15,210
When those leaders walk the
talk call for and demonstrate

172
00:11:15,240 --> 00:11:18,600
ethical behavior, that's going
to permeate the organization.

173
00:11:19,710 --> 00:11:24,570
Great, and it is critical for the CEO
and line management to walk the talk,

174
00:11:24,600 --> 00:11:25,500
as you say,

175
00:11:26,040 --> 00:11:29,760
I'm thinking of recent financial
fraud scandals like Enron,

176
00:11:29,761 --> 00:11:34,740
or Maydoff as examples of what happens
when ethics is not part of the tone at

177
00:11:34,741 --> 00:11:37,680
the top. In fact, because
of those scandals,

178
00:11:37,681 --> 00:11:42,150
many MBA programs have revamped their
curriculum to include courses on

179
00:11:42,151 --> 00:11:42,984
ethics.

180
00:11:43,380 --> 00:11:47,550
Some colleges and universities even
teach ethics as part of undergraduate

181
00:11:47,551 --> 00:11:49,260
accounting and finance programs.

182
00:11:49,920 --> 00:11:53,950
Why is it so important that students
be taught ethics early in their career?

183
00:11:54,340 --> 00:11:57,610
And what was your personal
experience learning about ethics?

184
00:11:57,670 --> 00:12:01,960
Was this something you learned as an
undergraduate or did you become more aware

185
00:12:01,961 --> 00:12:03,520
of it as a working professional?

186
00:12:04,540 --> 00:12:06,670
So, so I think it's vital,

187
00:12:07,270 --> 00:12:11,560
absolutely vital for students to learn
about ethics in their undergraduate

188
00:12:11,561 --> 00:12:15,220
courses and continue that
into later education,

189
00:12:15,640 --> 00:12:18,970
whether that's later in
academia or in the workplace,

190
00:12:19,960 --> 00:12:23,740
I think it should be embedded into
nearly every course in business,

191
00:12:24,160 --> 00:12:27,760
rather than being treated
as a separate concept. It's,

192
00:12:28,030 --> 00:12:32,380
it's really ethics applies
to everything we do. Now.

193
00:12:32,410 --> 00:12:36,550
I was fortunate in that I took an
ethics class at my freshman year at the

194
00:12:36,551 --> 00:12:37,540
university of Delaware.

195
00:12:38,230 --> 00:12:43,120
So it became a part of many projects and
discussions with my study groups early

196
00:12:43,121 --> 00:12:46,150
on. I've also worked at two companies,

197
00:12:46,150 --> 00:12:49,750
IBM and now IMA, where strong,

198
00:12:49,780 --> 00:12:53,680
ethical principles were a foundational
element of the organization's culture.

199
00:12:55,240 --> 00:12:57,130
Not every company has that though,

200
00:12:57,640 --> 00:13:01,030
which is why it's important to
start ethics education early.

201
00:13:02,020 --> 00:13:04,870
The real key is to make ethical decisions,

202
00:13:04,930 --> 00:13:09,490
instinctive a natural part of
the thought process so that when

203
00:13:09,940 --> 00:13:14,440
employees are faced with an ethical
dilemma, students and employees can,

204
00:13:14,441 --> 00:13:17,590
number one, recognize it. Number two,

205
00:13:17,650 --> 00:13:22,300
analyze it thoroughly and
three act accordingly and

206
00:13:22,301 --> 00:13:23,140
communicating,

207
00:13:23,141 --> 00:13:27,460
using the strength of a principle-based
approach to the ethical matter.

208
00:13:28,540 --> 00:13:33,400
I agree students who learn ethics early
will be in a much better position to act

209
00:13:33,401 --> 00:13:36,340
in a principles based
manner when issues arise.

210
00:13:36,880 --> 00:13:40,930
I think it also helps to have a trusted
source to turn to for ethics guidance at

211
00:13:40,960 --> 00:13:44,890
every stage in your career. And
I think that is the value of IMA.

212
00:13:44,950 --> 00:13:47,170
When you are a member of IMA,

213
00:13:47,171 --> 00:13:50,860
all ethics courses are offered
on a complimentary basis,

214
00:13:51,310 --> 00:13:55,930
and you have a community of peers who
must adhere to the IMA statement of

215
00:13:55,931 --> 00:13:59,200
ethical professional practice.
As the condition of membership,

216
00:13:59,890 --> 00:14:03,760
IMA has a long history of providing
resources for accounting and finance

217
00:14:03,761 --> 00:14:05,860
professionals to behave ethically.

218
00:14:06,340 --> 00:14:11,080
How important are professional
associations like IMA in maintaining

219
00:14:11,081 --> 00:14:12,490
standards and ethics?

220
00:14:13,210 --> 00:14:16,540
Margaret, I don't think that anybody
ever goes to work and decides,

221
00:14:16,541 --> 00:14:18,940
I think I'm going to be unethical today.

222
00:14:18,941 --> 00:14:23,680
We all spend our days responding to the
various pressures to which businesses

223
00:14:23,710 --> 00:14:26,140
and individuals, you
know, have to respond.

224
00:14:26,141 --> 00:14:31,060
Sometimes the temptation is
really great to sacrifice the

225
00:14:31,210 --> 00:14:32,043
long-term,

226
00:14:32,380 --> 00:14:36,460
like our principles for the
short-term of getting through the day,

227
00:14:36,880 --> 00:14:38,800
the earning season or the audit.

228
00:14:40,120 --> 00:14:45,070
Organizations like IMA offer a
structure for ethical decision making,

229
00:14:45,220 --> 00:14:48,520
which I think is key for accounting
and finance professionals.

230
00:14:49,570 --> 00:14:51,740
IMA's statement on
ethics in the profession,

231
00:14:51,770 --> 00:14:56,390
provides a framework for our members
and our non-members to follow

232
00:14:57,080 --> 00:15:02,000
including guidance on how to handle
difficult situations and what principles

233
00:15:02,001 --> 00:15:05,000
should not be compromised
regardless of circumstance.

234
00:15:06,080 --> 00:15:08,840
These along with our ethical helpline,

235
00:15:09,050 --> 00:15:13,820
which aids management accountants
in understanding IMA's ethics

236
00:15:13,821 --> 00:15:15,320
statement. Well,

237
00:15:15,560 --> 00:15:19,400
they're designed to give our teams the
support that they may need in a very

238
00:15:19,401 --> 00:15:24,140
difficult circumstances and helping
them make the tough calls to

239
00:15:24,500 --> 00:15:29,300
predict the true integrity
of their organizations. Now,

240
00:15:29,330 --> 00:15:31,880
if you don't mind, I'm going
to end where I started.

241
00:15:32,780 --> 00:15:35,090
Discussions of ethics can
be really, really tough.

242
00:15:35,900 --> 00:15:40,820
They can be gateways to our individual
morality and an exploration of

243
00:15:40,821 --> 00:15:44,720
one's ethics is really an
exploration of one's character

244
00:15:45,800 --> 00:15:49,160
that can be uncomfortable for
some people to openly discuss.

245
00:15:49,850 --> 00:15:54,140
But I really believe there's a real
benefit to talking about the ethical codes

246
00:15:54,141 --> 00:15:58,910
of our workplaces. It helps communicate
our culture to new employees.

247
00:15:59,510 --> 00:16:03,920
It reinforces the behavior of people
at all levels of the organization,

248
00:16:04,640 --> 00:16:08,840
and it provides the long-term benefit
of maintaining the integrity of our

249
00:16:09,620 --> 00:16:10,453
organizations.

250
00:16:10,580 --> 00:16:14,990
Ethics should and must be a bedrock of
the accounting and finance profession.

251
00:16:17,350 --> 00:16:18,820
This has been Count Me In,

252
00:16:18,940 --> 00:16:23,230
IMA's podcast providing you
with the latest perspectives
of thought leaders from

253
00:16:23,231 --> 00:16:26,140
the accounting and finance profession.
If you like what you heard,

254
00:16:26,200 --> 00:16:29,230
and you'd like to be counted in for
more relevant accounting and finance

255
00:16:29,231 --> 00:16:30,010
education,

256
00:16:30,010 --> 00:16:34,240
visit IMA's website at www.imanet.org.