CAT / FIA FBT Syllabus F. Professional Ethics In Accounting And Business - Acting in the Public Interest - Notes ^{4 / 4}

Acting in the public interest means acting for the common good of the community.

The meaning of ‘the public interest’ is often taken as self-evident.

Proponents and opponents of a proposal can equally and strongly argue that a particular proposal is, or is not ‘in the public interest’, often leading to confusion about the application of the term.

There are any numbers of variables in trying to understand why someone thinks something is in the public interest.

• Applying different views on: who the public are: what their objectives should be, what the public actually want, what underlying values should be applied?

• Applying different weighting to various interests that need balancing?

• Applying different decision-making processes on, for example, when individual preferences should be over-ridden; the merits of different types of incentive; how people will react, etc?

The emerging governance and accountability regime for business and the professions has become far more concerned with stakeholder interests and ethical matters than has been the case in the past.

Directors, executives and professional accountants who serve the often conflicting interests of shareholders directly and public indirectly, must be aware of the public’s new expectations for businesses and must manage their risks accordingly.

This awareness must be combined with traditional values and incorporated into a framework for ethical decision making and action.

The changes in public expectations and interests have triggered, in turn, an evolution in the mandate for business.

For some businesses, this may be stating the degree of change too strongly; but even they would concede that the relationship of business to society is one of interdependence where the long-run health of one determines that of the other.

The UK government’s Committee of Standards in Public Life set out seven principles that individuals employed in the public sector must follow:

1. Selflessness 

   – individuals should act solely in the public interest and not for personal gain or that of friends and family

2. Integrity 

   – individuals should avoid actions which would place them under financial or other obligations whereby the person holding their obligation could influence their public duties

3. Objectivity 

   – all choices, especially those regarding awarding contracts, rewarding or providing benefits to others and make public appointments must be made purely on merit

4. Accountability 

   – individuals are responsible for their own actions and are accountable to others.  

   They must subject themselves to whatever scrutiny comes with their office

5. Openness 

   – individuals must be open about their decisions and actions. 

   Information regarding the reasons for their decisions must be freely available.

   Restrictions on information are only permitted when it is in the wider public interest

6. Honesty 

   – where individuals have private interests which relate to their public ones, they should declare them and seek to resolve any conflict to protect the public interest

7. Leadership 

   – individuals must promote and respect the other six principles through leadership and example