Good Value Judgement - Malaysian Institute of Accountants

BUSINESS & ACCOUNTING
Ethics and
Good Value Judgement
Enhancing
What Can be Learnt?
Ishak Ismail & Hasnah Haji Haron
“In the 1960’s we are able
to create cities and modern
concrete jungles; yet the
souls of the inhabitants
appear empty and bereft of
meaning”.
Pak’ Hamka, Indonesia
“Nations survive as long as
their morality is alive. When
their morality is gone, they
too perish”.
Arabic Poet, Ahmad Shauqi Bey
“By the soul, and the proportion and the order given to it,
and its enlightenment and its
wickedness and its piety,
successful is the one who keeps
it pure and ruined is the one
who corrupts it”.
Quran, 9 : 7 – 10
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ACCOUNTANTS TODAY • September 2008
Enhancing Ethics and Good Value Judgement: What can be Learnt?
E
nsuring true and fair financial re
porting is the most important func
tion of auditors. Their daily activities consist of conducting inquiries to ensure the survival of organisations, and therefore of the entire nation. Auditors are also
important because they help to strengthen
governance practices in all sectors . Their
role is to ensure responsibility and integrity among those in the profession at the
workplace. Failure to adhere to this can
bring about more cases such as those of
Transmile, Time dotCom, Enron and Pewaja
Steel. Over the years, since the implementation of the New Economic Policy, the lack
of transparency and governance among
those given responsibility has seen the folding up of many companies set up by the
quasi-government bodies and the state economic corporations with the objective of creating more equitable economic participation
and the dismantling of job functions by ethnic background. Aware of this phenomenon,
the present government wants a very effective and efficient delivery system, which is
crucial to national development. Thus, ethics and integrity must therefore be reflected
in all undertakings. Therefore, auditors
must be willing and ready to communicate
any illegal, immoral conduct and inappropriateness that happens in any organisation
that is against the public interest. But in doing so, good moral judgement and values
must prevail. If not, with the absence of
whistleblowers, there is a possibility that
those who are accused of misdeeds and malpractices will sue for libel and defamation.
As in many cases that have happened in this
country, the authorities act more efficiently
on defamation issues than the real issues at
hand.
transparency, accountability and justice.
The definition has been further fine tuned
by Jim Kelly, the Chairman of United Parcel Services, who was quoted as saying,
“Ethical behaviour is not an act but a habit.
Just as good health requires cultivating the
habits of getting enough sleep and eating
wholesome food, Aristotle believed that the
right action was the result of developing good
moral habits. In a business context, this means
training and at the deepest level, something
we call corporate culture.”
Therefore, each and ever y decision,
judgement or action is only performed when
it is ethical to do so. The question whether
it is ethical or not will depend on the beliefs
and values the corporate individual upholds
and the judgement it makes upon it. It is
also the beliefs that the corporation upholds
that will determine whether the decisions
and judgements are ethical or not.
ful that it would change the scenario and
put the picture into a better perspective. Set
upon the spirit and principles of the Federal Constitution embedded with the philosophy and principles of the Rukun
Negara, the plan’s objective is “to establish
a fully moral and ethical society whose citizens are strong in religious and spiritual
character and imbued with the highest ethical standards.” In terms of implementation,
this plan (2004-2008) will address the following crucial areas:
Roots of Unethical Behaviour
Defining Ethics
䡲 When managerial values undermine integrity.
Combating misconduct is not merely a
show in the gallery. It is not only about
preaching but also doing. Articulation alone
is meaningless as it does not touch the
heart. Henceforth the last bastion is one’s
religion. In line with this spirit, the government has launched the Islam Hadhari concept. It is “an approach that emphasises development, consistent with the tenets of Islam, and focuses on enhancing the quality of
life. It aims to achieve this via the mastery of
knowledge and the development of the individual and the nation; the implementation
of a dynamic economic, trading and financial system; an integrated and balanced development that creates a knowledgeable and
pious society who hold noble values and are
honest, trustworthy, and prepared to take global challenges.” As a point of contention, Allah has narrated a verse in the Quran (3 :
110) which reads, “You are the best of
peoples evolved for mankind, enjoining
what is right and forbidding what is wrong
and believing in Allah.” Henceforth, enhancement of integrity is not a false dream,
if we as leaders in our own right are able
to:
䡲 Give directions and guidance to various
sectors so that they will work closely together to build a united, harmonious,
moral and ethical society.
Put simply, ethics is about a set of moral
principles that distinguish between what is
right and what is wrong. It is a set of values
that guide the conduct and the behaviour
of individuals, enabling them to differentiate between right and wrong, good and bad,
and between what should be done and what
should and cannot be done. Organisational
ethics on the other hand serves as guidelines in the conduct of duties. These include
adherence to the principles of honesty, competency, trustwor thiness, truthfulness,
September 2008 • ACCOUNTANTS TODAY
Companies fail because of poor governance. Much harm and cruelty in organisations and nations were caused by immoral
and unscrupulous stewardship. Good values need to be inculcated to the soul with
the good deeds of justice, integrity, equity,
accountability and trust. Auditors should
steer away from the roots of unethical
behaviour that would diminish integrity and
ethics, and these include:
䡲 When individuals favour their own interests over the well-being of their stakeholders.
䡲 When individuals reward behaviour that
violate ethical behaviour.
䡲 When individuals are willing to abuse
their position and power to enhance their
individual interests, and
The National Integrity Plan
Unethical behaviour can be avoided. Malaysia as a nation has been combating and
fighting it since the early days of independence with minimum positive outcome.
With this in mind and realising the negative perceptions of the rakyat towards how
things are managed, the government formulated the National Integrity Plan. With
this plan, the present administration is hope-
䡲 Effectively reduce corruption, malpractices and abuse of power;
䡲 Increase efficiency in the public service
delivery system and overcome bureaucratic inefficiency;
䡲 Enhance corporate and business ethics;
䡲 Strengthen the family institutions; and
䡲 Improve the quality of life and societal
well-being
䡲 Raise awareness, commitment and cooperation among all sectors in their efforts
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Enhancing Ethics and Good Value Judgement: What can be Learnt?
at enhancing integrity so that integrity
becomes a way of life.
䡲 Encourage a sense of accountability
among members of the community and
promote the development of civil society
that respects and upholds the principles
of integrity.
䡲 Contribute towards strengthening the
moral foundations of the community and
the country, and improving the well-being of the community, and
䡲 Raise competitiveness and resilience in
meeting the challenges of globalisation.
The Concept of Tawhid
Ethics and integrity is not a numbers
game. After economic, legal and moral considerations the inclination to behave in an
ethical manner with integrity is very much
dictated by our religiosity. According to the
Concept of Tawhid, the political, social and
religious aspects of a man’s life form a homogenous whole, which is consistent from
within, as well as integrated with the vast
universe without. This is the vertical dimension of Islam. The underlying principle under this concept is goodness, which includes rightness, equity, equilibrium and
justice, truth and rights, and piety. This Concept of Tawhid has far reaching implications
in our business dealings and service delivery systems. These include sincerity in business dealings, consciousness of responsibility towards stakeholders, community and
environment, geniality towards fellow humans, moderation in business dealings, fair
treatment of customers and zeal in businessbuilding. Under the Islam Hadhari Approach, a further ten principles are used as
strategic intent:
䡲 Faith and piety in Allah;
䡲 A just and trustworthy government;
䡲 A free and independent people;
䡲 Mastery of knowledge;
䡲 Balanced and comprehensive economic
development;
䡲 A good quality of life:
䡲 Protection of the rights of minorities and
women;
䡲 Cultural and moral integrity;
䡲 Safeguarding the environment; and
䡲 Strong defenses
The above argument was illluminated by
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Paul Wolfowitz, World Bank President (2006),
who said that, “People need a government that
works and functions effectively and achieves
economic progress which is in the development of community. It is a transparent and accountable institution, with strong skills and
competence, and a fundamental willingness
to do right things. Those are the things that
enable the delivery of services effectively.”
Ethics and Integrity as a
Corporate Culture
Since the implementation of the New
Economic Policy in the early 1970’s, Malaysia has transformed itself from an agrobased economy to one that is industrial.
Throughout this transformation process,
the society’s value attachment has also
evolved to self-actualisation as a result of
economic and social mobility. But the workvalue has not changed, even with the establishment of Putrajaya, a modern and
ICT equipped administrative front. The
privatisation project was a disaster with
much of the work-values still at the undesirable level, although since the 1980s
greater attention has been given to the concepts of , “Bersih, Cekap dan Amanah”,
“Penerapan Nilai-Nilai Islam”, “Budaya
Kerja Cemerlang”, “Piagam Pelanggan”
and “ISO 9000”. But it is sad to note that
after a series of attempts, slogans remain
slogans without substantial improvement
in the work-culture. Hopefully, the attempt
with the National Integrity Plan and the Islam Hadhari concept will create a paradigm
shift among Malaysian employees with a
significant amount of time and energy being invested for better transparency and
trustworthiness. Leaders of organisations
must personally live the new cultural practices and be role models. The importance
of vision, mission and value statements in
providing direction and behavioural guidelines should not be taken for granted or
remain passive on the walls. A roadmap
should be planned and the target date set.
Total involvement of staff at all levels is
critical. Old habits should be thrown out
and leaders should live by example. There
should be an insertion of core values parallel to the true spirit of the National Integrity Plan and the Islam Hadhari concept.
Most impor tant of all, the new culture
should transcend beyond levels, as walk-
ing the talk sends a powerful message
across an organisation. Good ethics and
value judgement is a winning corporate culture as it helps nations and organisations
strive towards excellence, glory and distinction.
Conclusion
Malaysia has been endowed with richness of human capital and natural resources.
But the abandonment and the failure of
many desirable projects were much attributed to human error as a result of greed and
dishonesty. The act of whistleblowing is a
must but it has to be done with ethics and
integrity. To achieve excellence, one has to
begin with the individual. The individual
should be a catalyst for institutions such as
family and organisations to follow suit. The
role of leaders cannot be under emphasised
and underplayed. There should be inculcation and enculturation of ethics and integrity and it might be a life-long process. To
do so, we need proper systems and procedures, for a better world where there is both
accountability and justice and where there
is peace and humanity.
䡲 Start with yourself
䡲 Start today
䡲 Care & dare
“Integrity is really a matter of who you are
when no one is around.”
Datuk Abdul Samad Haji Alias (Dr.),
Past President of The Malaysian Institute of
Accountants AT
References
Accountants Today, Vol. 20 No. 12, December
2007.
Accountants Today, Vol. 21. No. 1, January 2008.
Annual Report 2007, The Institute of Internal
Auditors Malaysia.
Beekum, R.I, “Islamic Business Ethics,” The International Institute of Islamic Thought, Virginia,
USA 1997.
30th Anniversary Report, The Institute of Internal Auditors Malaysia.
National Integrity Plan, Government of Malaysia, April 2004.
Corporate Social Responsibility — Our First Look,
Malaysian Institute of Integrity, 2007.
Good Governance for Development — Private Sector Perspective, Malaysian Institute of Integrity,
2006.
Proceedings of the World Ethics and Integrity
Forum 2005 — Building Trust and International
Cooperation in Strengthening Integrity, Integrity
Institute of Malaysia, 2005.
ACCOUNTANTS TODAY • September 2008