Governance - IFAC urges 'moral' codes

Corporate codes of conduct should be used by accountants to control the behaviour of employees and establish ‘moral’ codes for businesses, according to a study by the International Federation of Accountants’ financial and management accounting committee, writes Lucinda Kemeny.

The study, based on interviews conducted with senior management, reports findings related to 13 codes in eight corporations in four countries – including the 3M Corporation, Zeneca Group and the Commonwealth Bank of Australia.

IFAC concludes that corporate codes serve three purposes: as an overarching means of establishing social morality, to induce appropriate responses from staff in terms of values, choices and behaviour, and to establish controls over those values. The codes should therefore be used to selectively control employee behaviour differently under different circumstances, according to IFAC.

The report is the result of four years of research led by IFAC and coincides with the introduction last week by the Institute of Directors of a professional qualification to set a benchmark for competence in the boardroom where directors will also be required to subscribe to a code of professional conduct.

Professor William Birkett, a committee member, said: ‘The view of the use of codes emerging from this study contrasts with much of the normative literature. Codes are seen here as practical management tools, which can be used selectively to control employee behaviour.’