Introduction and objectives
The G100 aims to promote professionalism and ethical behaviour and maximise the integrity of G100 members by:
issuing the Code of Conduct that sets a high quality benchmark for ethical and professional conduct of Chief Financial Officers and Senior Finance Executives (CFOs) in Australia; and sharing knowledge, professional development activities and openly advocating good governance principles.
This Code of Conduct, which succeeds that developed by the G100 in 2003, has been drafted bearing in mind the changing and evolving role and responsibilities of CFOs to now encompass a varied portfolio of activities in addition to those relating to the integrity of financial reporting and controls. Since the issue of the 2003 Code there have been significant developments in the role of the CFO and the environment in which the CFO operates.
These developments include expanded responsibilities, changes in the business environment including the impact of, and responses to, the global financial crisis, the European sovereign debt crisis, the introduction of legislation relating to corrupt practices, the impact of Court decisions, changes in the regulatory and legislative environment, and changes in community expectations of companies and their officers
This Code, which applies to CFOs, also recognises the need to ensure the commitment of the CFO and the CFO’s organisation to ethical decision making and behaviour and the integrity of reporting.
The Code is not a document to be considered in isolation. It is important that the Code is not viewed as a set of rules that are applied in a ‘tick-the-box manner’ or by following a prescribed approach. Rather, the Code should be regarded as forming part of a broader approach to ethical behaviour and decision making which becomes more powerful when its principles are reflected in the CFO’s decisions and actions and it is consistent with the culture of the organisation.
Qualities of CFOs
- above all, be a role model in setting the standards for the entire finance function and throughout the organisation;
- be competent, committed, free from bias and consistently adhere to high standards;
- possess an unwavering commitment to stakeholders and a dedication to the integrity of high quality financial information;
- abide by the laws and regulations (in form and spirit) in carrying out their duties and responsibilities; and
- possess a strong will to uphold ethical and professional standards and be honest and straightforward in all dealings with the organisation and its stakeholders.
Principles for CFOs
The following eight principles for CFOs in Australia form a basis for the highest level of ethical and professional conduct in the finance function.
The principle of integrity requires the CFO to be straightforward and honest in all professional and business relationships. Integrity also implies fair dealing and truthfulness.
The CFO shall protect and preserve the integrity of all of the organisation’s transactions and dealings and shall not knowingly be associated with false or misleading reports, returns or other information, inclusive of discussions on strategy, risk management or any other subject matter with which the CFO is involved.
The CFO shall prepare or present financial or management information transparently, honestly and in accordance with relevant professional standards so that the information will be understood in its context. The CFO shall take reasonable steps to:
maintain information that describes clearly the true nature of business transactions, assets and liabilities;
classify and record information in a timely and proper manner; andrepresent the facts accurately and completely in all material aspects.
The CFO shall maintain integrity in all company dealings and transactions.
The CFO shall not knowingly make any misrepresentations or participate or assist in such activities and must take steps to be dissociated from such information and activities.
The principle of objectivity requires CFOs to not compromise their professional or business judgment because of bias, conflict of interest or the undue influence of others.
In discharging the CFO’s professional obligations, the CFO may be exposed to situations that may impair objectivity. CFOs shall not allow circumstances or relationship biases to unduly influence their professional judgment in the discharge of their professional obligations.
The CFO shall observe the principle of objectivity in dealings with the Board, audit committees, board committees, internal and external auditors, other senior managers within the organisation and other relevant parties external to the organisation. The CFO shall remain objective in reporting to the Chief Executive Officer and those charged with governance through appropriate access and authority.
The CFO shall exercise professional judgment in making informed decisions and shall maintain an attitude of professional scepticism. This includes adopting a questioning approach and being alert to conditions which may indicate a possible error, misstatement or breach of policy or legislation.
Professional Competence and Due Care
The principle of professional competence and due care requires the CFO to:
maintain professional knowledge and skill at the level required to ensure that the organisation’s stakeholders receive outcomes which are commensurate with the goals of the organisation; and
act diligently in accordance with applicable technical, professional and ethical standards, and reasonable public expectations when performing the CFO’s duties.
The maintenance of professional competence requires a continuing awareness and an understanding of relevant technical, professional and business developments.
Diligence encompasses the responsibility to act in accordance with the requirements of an assignment, carefully, thoroughly and on a timely basis. The CFO shall exercise diligence and good faith in the performance of all duties and responsibilities.
Where appropriate, the CFO shall make relevant stakeholders aware of any limitations to the work performed or presented under the CFO’s representation.
CFOs shall ensure, to the best of their ability, that information is accurate, timely and represents a true and fair view of the financial performance and condition of the organisation and complies with all applicable legislative requirements.
The CFO shall only undertake significant tasks for which the CFO has, or can obtain, sufficient specific training, experience or appropriate resources. In rare circumstances where the CFO is unable to perform duties with the appropriate degree of professional competence and due care, the CFO shall make specific disclosures to relevant stakeholders as to any limitations or decline to perform the duties in question.
The principle of confidentiality requires CFOs to refrain from:
disclosing confidential information acquired as a result of professional and business relationships outside the organisation without proper and specific authority or unless there is a legal or professional right or duty to disclose; and using confidential information acquired as a result of professional and business relationships to their personal advantage or the advantage of third parties.
The CFO shall maintain confidentiality in all environments. This obligation continues outside of business hours and after the end of employment with the organisation.
The CFO shall act with the same diligence in maintaining confidentiality in an informal environment as in the workplace.
However, in circumstances where a CFO is considering disclosing confidential information , the CFO should also consider whether to obtain legal or other professional advice prior to making the disclosure.
The CFO shall not engage in any professional conduct involving dishonesty, fraud, or deceit or commit any act that reflects adversely on the CFO’s professional reputation, integrity, or competence.
The principle of professionalism requires the CFO to comply with relevant laws, regulations, and professional and ethical standards, and avoid any act or omission that the CFO knows or should know may discredit themself, the CFO’s employer, or the finance profession. This includes acts or omissions that a reasonable and informed third party, weighing all the specific facts and circumstances available to the CFO at that time, would be likely to conclude adversely affects the good reputation of those persons or organisations.
The CFO shall remain committed at all times to observing, developing and implementing the principles embodied in this Code in a conscientious, consistent and rigorous manner.
The CFO shall be honest and truthful and not:
make exaggerated claims in regard to the services the CFO is able to offer, the qualifications the CFO possesses, or experience gained; or
make disparaging references or unsubstantiated claims about the performance of others.
When complying with the ethical and technical requirements of any relevant regulatory or professional body, the CFO shall be guided not merely by the words but also by the spirit of the requirements.
Conflicts of Interest
The CFO shall take reasonable steps to identify circumstances that could give rise to a conflict of interest. The CFO shall evaluate the significance of any threats and apply processes when necessary to avoid the threats or reduce them to an acceptable level.
The CFO shall disclose to those charged with governance any direct or indirect relationship, conflict or other circumstances that may create a threat to compliance with the Code, or which could compromise in any way the reputation of the CFO, the company or the stakeholders or affect the performance of the company.
The CFO shall use reasonable care and judgment to achieve and maintain independence and objectivity in the CFO’s professional activities. The CFO shall not offer, solicit, or accept any gift, benefit, compensation, or consideration that reasonably could be expected to compromise the CFO’s own or another’s independence and objectivity.
The CFO shall take appropriate action to identify, disclose and manage any conflicts of interest. Where conflicts of interest cannot be appropriately managed the CFO shall eliminate or avoid them. The CFO shall ensure that disclosures of conflicts of interest, actual or perceived, are prominent and communicated effectively.
Duties to Stakeholders
The CFO shall act in an ethical manner when carrying out their duties to relevant stakeholders.
CFOs shall act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer. The CFO shall not accept gifts, benefits, compensation, or consideration that competes with or might reasonably be expected to create a conflict of interest with their employer’s interest unless the CFO obtains written consent from all parties involved.
CFOs shall place the interests of shareholders above their own personal interests. CFOs shall make reasonable efforts to detect and prevent violations of applicable laws, rules, regulations, and the Code by anyone subject to their supervision or authority.
Integrity of capital markets:
CFOs shall act with integrity, competence, diligence, respect, and in an ethical manner consistent with professional obligations. CFOs in possession of material information that could affect their professional judgment and/or create threats to compliance with the Code shall not act or cause others to act on the information. The CFO shall neither manipulate information nor use confidential information for personal gain.
Governance, risk management and internal controls
The CFO shall commit to fostering good governance in the organisation which incorporates sound risk management principles.
The CFO shall ensure the maintenance of a sound system of internal controls to safeguard the organisation’s assets and to manage risk exposures through appropriate forms of control.
Certain governance activities may increase the likelihood of identifying and deterring unethical behaviour. Such activities may be generated by legislation, regulation, for the work place or by professional bodies. In circumstances where a CFO suspects that unethical behaviour or actions may be occurring, the CFO shall act to appropriately address these suspicions. In these circumstances, the CFO should consider obtaining legal or other professional advice.
Use of this Code
The Group of 100 encourages CFOs to:
- use this Code either as written or as adjusted to suit the circumstances of the CFO’s organisation; and
- share this Code with the Board and committees to which the CFO reports.
The Group of 100 acknowledges the professional contribution of a joint Group of 100 and Accounting Professional & Ethical Standards Board (APESB) Taskforce in the revision of the Code.
Users of the Code may also want to consult with other sources of professional guidance including the APESB’s pronouncements, specifically: APES 110 Code of Ethics for Professional Accountants; and APES GN 40 Ethical Conflicts in the Workplace – Considerations for Members in Business.