It may not be a good idea to accept offers of travel from suppliers.
By Tiina-Liisa Sexton
A tempting travel offer
You are the senior manager responsible for deciding on a new multimillion dollar specialised computer system to cater for your organisation's expansion into overseas markets.
A major supplier has invited you and your partner to attend a two-day 'user group' and system development workshop to better understand the product they supply. The workshop will take place at a five-star resort.
Your costs will be met by your employer, but your partner's travel and accommodation costs will be paid for by the supplier. You notice that the workshop includes a three-hour session on new specialised systems offered by the supplier, and that the rest of the two days consist of leisure activities and fine dining. How should you deal with this offer?
Before deciding whether to accept the offer, it is important to consider several points. Firstly it is necessary to clearly understand the reason for the offer to attend the workshop and whether the offer was designed to create indebtedness. There is a potential conflict of interest with receiving and accepting offers that are not trivial and clearly not in the normal course of business. Any offer or inducement made in an attempt to unduly influence actions or decisions would be considered unethical.
The key ethical principles that you and your organisation will want to ensure are upheld are integrity, objectivity and professional behaviour. The significance of any threats to these principles will therefore depend on the nature, value and intent behind the offer.
APES 110 Code of ethics for professional accountants requires that this assessment be undertaken not only when the member in business is offered an inducement, but also when inducements are offered to an immediate or close family member.
APES 110 paragraph 350.4 further notes that 'the real or apparent threats to compliance with the fundamental principles do not merely arise from the acceptance of an inducement but, sometimes, merely from the fact of the offer having been made'.
An assessment of the risk associated with all offers should be made and higher levels of management or those charged with governance informed; it should be routine to report the offer of hospitality, gifts or inducements to a superior.
Furthermore, just as openness and transparency work at the organisation level to reduce the risk of unethical behaviour, documenting and disclosing potential threats to objectivity and independence is a sound course for an individual in such a situation. It is also recommended that a register of all gifts, offers and hospitality be maintained, irrespective of whether they are accepted, declined, returned, or given to charity.
Secondly, it is likely that you would be required to adhere to any organisational policy on the acceptance of gifts or inducements. Your organisational policy may require you to refuse all supplier gifts, and you must respect this policy.
If you are part of the sourcing function, or have been delegated the authority by your management board to approve major procurement contracts, it would not be appropriate to accept an offer of this kind from a supplier. This response is based on the conclusion that a reasonable and informed party, having knowledge of all relevant information, is likely to consider the offer a significant threat to compliance with the fundamental principles.
In this situation you don't want to compromise your personal integrity so you must not accept the offer of payment for your partner's costs. You should also make the supplier aware of your organisational policy, so that no such offers are made in the future.
Many organisations are sensitive to even the appearance of improprieties, and suppliers failing to observe their policies could be disqualified from conducting business with the organisation. In addition, if there is a probity officer associated with procuring this contract, this officer should be advised of any offers or inducements.
Dilemma solved by Tiina-Liisa Sexton, CPA Australia's ethical adviser
