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18.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards

Institute of Management Accountants (IMA)​

The Institute of Management Accountants (IMA) is a global association for management accountants and financial professionals.

Mission:

  • Advance the management accounting profession
  • Provide education and certification
  • Promote ethical standards
  • Support professional development

Key Activities:

  • Professional certification (CMA - Certified Management Accountant)
  • Continuing education
  • Research and publications
  • Networking opportunities
  • Ethical guidance

Certified Management Accountant (CMA)​

The CMA is a professional certification for management accountants.

Requirements:

  • Bachelor's degree
  • Two years of professional experience
  • Pass two-part examination
  • Continuing education

Benefits:

  • Professional recognition
  • Career advancement
  • Higher earning potential
  • Global recognition
  • Professional network

Ethical Standards​

Ethics are crucial in managerial accounting because:

  • Managers rely on accurate information
  • Decisions affect stakeholders
  • Trust is essential
  • Professional reputation matters
  • Legal compliance is required

IMA Statement of Ethical Professional Practice​

The IMA has established ethical standards for management accountants:

Principles​

1. Honesty

  • Provide accurate information
  • Do not mislead
  • Be truthful in communications

2. Fairness

  • Treat others fairly
  • Avoid conflicts of interest
  • Make objective decisions

3. Objectivity

  • Base decisions on facts
  • Avoid bias
  • Maintain independence

4. Responsibility

  • Fulfill obligations
  • Accept accountability
  • Act in organization's best interest

Standards​

1. Competence

  • Maintain professional competence
  • Perform duties in accordance with standards
  • Provide accurate information

2. Confidentiality

  • Keep information confidential
  • Do not disclose without authorization
  • Do not use for personal advantage

3. Integrity

  • Avoid conflicts of interest
  • Refuse gifts that might influence decisions
  • Do not subvert organization's legitimate objectives

4. Credibility

  • Communicate information fairly and objectively
  • Disclose all relevant information
  • Disclose delays or deficiencies

Ethical Dilemmas in Managerial Accounting​

Common Scenarios:

Pressure to Manipulate Budgets:

  • Manager wants favorable budget to get approval
  • Ethical response: Present realistic budget

Confidential Information:

  • Access to sensitive cost information
  • Ethical response: Maintain confidentiality

Conflict of Interest:

  • Personal relationship with supplier
  • Ethical response: Disclose and recuse

Reporting Unfavorable Results:

  • Pressure to hide poor performance
  • Ethical response: Report accurately

Luxembourg Professional Standards​

Ordre des Experts-Comptables (OEC):

  • Professional accounting body in Luxembourg
  • Sets ethical standards
  • Provides guidance
  • Enforces professional conduct

Fiduciaires:

  • Licensed accounting service providers
  • Subject to professional standards
  • Must maintain ethical conduct
  • Regulated by authorities

Ethical Decision-Making Framework​

Steps:

  1. Identify the Issue: What is the ethical problem?
  2. Gather Information: What are the facts?
  3. Identify Alternatives: What are the options?
  4. Evaluate Alternatives: Consider ethical principles
  5. Make Decision: Choose best alternative
  6. Take Action: Implement decision
  7. Reflect: Learn from experience

Think It Through​

A manager asks you to adjust a budget to make it look more favorable, even though you know the numbers are unrealistic. How would you handle this situation using ethical principles?