- 10 Marks
SCS – Nov 2021 – L3 – Q8 – Professional practice and codes of ethics
Discuss the merits and demerits of the rules-based approach versus the principles-based approach to setting ethical standards.
Question
COM has not had any serious corporate governance issues that have raised concerns as to potential ethical conflicts. However, the Board of Directors has raised concerns about the fact that the Finance department does not have a separate code of conduct in view of the risks associated with their work. Some are proposing a rules-based approach instead of a principles-based approach.
Required:
The CEO has approached you as a Finance professional and a friend to assist him in guiding the Board since the issue was not discussed exhaustively and there is the likelihood that the matter would be part of the next Board meeting. Write a report discussing the merits and demerits of both rules-based approach and a principles-based approach to setting ethical standards.
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