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ACCA Applied Knowledge · Business and Technology · Corporate codes of ethics

A company introduces a detailed rulebook stating that gifts above $50 must be refused. A manager accepts repeated gifts of $49 from the same supplier and then awards the supplier a large contract. Which statement is the best analysis?

The manager exploited the rules-based approach by following the letter of the $50 limit while breaching its spirit. Repeated gifts followed by a contract award threaten integrity and objectivity, showing that detailed rules can be circumvented unless backed by principles.

  1. AThe manager complied fully, so no ethical issue arises
  2. BThe rules-based approach has been exploited by following the letter of the rule while breaching its spirit, and integrity and objectivity are threatenedCorrect
  3. CThe principles-based approach has failed because no rule was set
  4. DThe incident shows that ethical codes should be abolished

Explanation

Staying just under the limit meets the letter of the rule, but the pattern of gifts followed by a contract creates a self-interest threat to objectivity and integrity. This is a known weakness of rules-based codes: people can comply technically while defeating the purpose. Option one wrongly judges only on the rule.

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