## **Learning Outcomes**

After reading this article, you will be able to identify and explain the core ethical principles—integrity, objectivity, and confidentiality—as required in ACCA performance management. You will understand how these principles guide accountants’ behaviour, recognise scenarios where they may be at risk, and apply professional scepticism to ensure ethical decision-making in practice. You will also be able to identify threats to these principles and methods to address them in exam situations.

## **ACCA Advanced Performance Management (APM) Syllabus**

For ACCA Advanced Performance Management (APM), you are required to understand and apply the fundamental ethical principles as defined by the ACCA Code of Ethics. You should focus on:

- The meaning and importance of integrity, objectivity, and confidentiality in performance management roles
- Recognising threats to ethical principles in management accounting
- Applying professional scepticism in reviewing data, reports, and recommendations
- Evaluating how ethical issues may affect organisational performance and personal conduct
- Identifying actions to address ethical dilemmas in performance management settings

## **Test Your Knowledge**

_Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision._

1. Which principle is compromised if an accountant withholds information that could negatively affect the company's reported performance?  
   a) Objectivity  
   b) Integrity  
   c) Confidentiality  
   d) Professional competence

2. Your supervisor pressures you to alter a management report to improve quarterly results. Which ethical principle is primarily at risk?  
   a) Objectivity  
   b) Confidentiality  
   c) Integrity  
   d) Professional behaviour

3. True or false? It is acceptable to disclose confidential client information if a colleague from another department requests it for a project.

4. List two actions you can take when facing a threat to your objectivity as a management accountant.

5. What does professional scepticism require when reviewing a divisional manager’s performance report?

## **Introduction**

Ethics and professional scepticism are central to the role of the management accountant and are tested throughout the ACCA APM exam. Performance management decisions often have significant consequences for organisations and their stakeholders. As such, accountants must consistently follow the core ethical principles of integrity, objectivity, and confidentiality, and apply a questioning mind to the information and situations they encounter.

This article examines each principle in detail, outlines common threats, and explains how to apply professional scepticism to safeguard ethical decision-making in performance management practice.

> **Key Term: integrity**
> Acting with honesty and strong moral principles, being straightforward and truthful in all professional and business relationships.
>
> **Key Term: objectivity**
> Not allowing bias, conflict of interest, or undue influence of others to override professional judgment.
>
> **Key Term: confidentiality**
> Respecting the privacy of information acquired as a result of professional and business relationships and not disclosing it without proper authority or legal duty.

## **Ethical Principles in Performance Management**

### Importance of Professional Ethics

Accountants regularly handle sensitive information, produce reports used for decision-making, and may be involved in setting or measuring performance targets. Any breach of ethics can damage their reputation, the organisation, and trust in the profession.

### Integrity

You must always present information truthfully and avoid misleading others. Withholding negative data, deliberately misrepresenting results, or acting dishonestly violates integrity. Pressure from management to manipulate performance figures is a common threat.

### Objectivity

Objectivity ensures your decisions and reports are impartial, based on evidence rather than personal relationships, self-interest, or undue influence. Accepting gifts, incentives, or facing pressure from superiors or colleagues can threaten your objectivity.

### Confidentiality

Information obtained during your work must not be shared outside the organisation, or used for personal advantage, unless permitted or required by law. Discussions about sensitive internal data, especially outside of work or with unauthorised parties, are breaches of confidentiality.

> **Key Term: professional scepticism**
> A questioning mindset that considers whether information is reliable and unbiased, seeking sufficient evidence before forming a judgment.

## **Professional Scepticism in Practice**

Professional scepticism is essential when evaluating information, reports, or recommendations. It protects you from accepting inaccurate, biased, or incomplete data, and helps guard against being misled by others.

This means:

- Testing the reliability and completeness of performance data
- Questioning assumptions and methods in management reports
- Looking for indications of bias or manipulation, especially where personal incentives are involved
- Requesting supporting evidence for unusual or unexpected results

### **Worked Example 1.1**

A management accountant receives a request from a divisional head to exclude late delivery penalties from a monthly performance report, stating it is a “one-off issue” that affects bonuses.

**Question:** Which principles are at risk, and what steps should the accountant take?

> **Answer:**  
> Both integrity and objectivity are at risk, as omitting penalties would mislead users of the report and benefit the divisional head’s bonus. The accountant should refuse the request, explain the ethical conflict, and, if pressure continues, escalate the matter following the organisation’s policies.

### Common Threats to Ethics

- **Self-interest:** Reward schemes linked to short-term performance may tempt manipulation of targets or results.
- **Familiarity:** Long-term working relationships can reduce impartiality.
- **Intimidation:** Pressure from superiors or fear of negative outcomes can lead to ethical compromises.
- **Advocacy:** Acting on behalf of a department or person, rather than the organisation as a whole, can bias advice.

### Responding to Ethical Dilemmas

To deal with threats, you should:

- Identify the ethical principles at risk
- Seek guidance from codes of conduct or professional bodies
- Discuss concerns with a relevant manager or the organisation’s ethics officer
- Where necessary, escalate the issue through formal channels

> **Key Term: ethical threat**
> A situation or relationship that puts an accountant at risk of, or appears to risk, breaching ethical principles.

## **Maintaining Confidentiality**

You must protect all confidential information obtained in your role, including performance results, strategic plans, and personal data. Disclosure should only occur with proper authority or where legally required (for example, by regulators).

Sharing internal data with unauthorised persons or for personal gain is always unethical and may have legal consequences.

### **Worked Example 1.2**

An employee from another department asks you to provide them with detailed performance data. You are not sure if they are authorised to see this information.

**Question:** What should you do?

> **Answer:**  
> Confirm whether the request is properly authorised. Only share information in line with company policy and your own professional responsibilities. If in doubt, seek direction from your supervisor or the relevant data protection officer.

### **Exam Warning**

In exam scenarios, always check whether any information has been omitted, altered, or presented with apparent bias. Marks are often awarded for identifying threats to ethics and explaining the appropriate response.

### **Revision Tip**

When faced with ethical scenarios, use the fundamental principles (integrity, objectivity, confidentiality) as a checklist. Identify the principle at risk, the nature of the threat, and recommend clear, professional action.

## **Summary**

Accountants must consistently apply the principles of integrity, objectivity, and confidentiality, and remain professionally sceptical when producing or evaluating performance management information. Identifying, addressing, and reporting ethical threats protects both the organisation and the individual, and is a core requirement for success in the ACCA APM exam.

## **Key Point Checklist**

_This article has covered the following key knowledge points:_

- Explain the meaning and significance of integrity, objectivity, and confidentiality in performance management
- Identify common threats to ethical behaviour in management accounting roles
- Apply professional scepticism to performance reports and data
- Recognise how to respond appropriately to ethical threats and dilemmas
- Describe the importance of confidentiality in handling sensitive organisational information

## **Key Terms and Concepts**

- integrity
- objectivity
- confidentiality
- professional scepticism
- ethical threat

Professional ethics and scepticism in PM - Integrity objectivity and confidentiality