With end-of-year party dates locked down and client lunch celebrations booked in for December, holiday season is just around the corner.

While it’s not uncommon for members to receive gifts throughout the year, this is a good time for members to refresh their knowledge of workplace policies on gifting and look at their ethical responsibilities, says Rebecca Stickney, leader of the CA ANZ professional conduct team in New Zealand.

What is a gift?

Gifts are defined in the code of ethics as an inducement: an object, situation or action used as a means to influence another individual’s behaviour.

Inducements can range from minor acts of hospitality between business colleagues (for members in business) or between members and existing or prospective clients (for members in public practice), involving acts that result in non-compliance with laws and regulations.

An inducement might take the form of a physical gift, hospitality, entertainment or political or charitable donations.

Stickney advises all members to make a professional judgement when it comes to receiving (or giving) gifts.

“It’s going to depend on where you work and what the policies are of your employer and the nature of the engagement,” she says.

A member working in the public sector or government might have additional policies to adhere to, for example. “One rule isn’t going to necessarily apply to everybody,” she says.

“In some cases, it's perfectly OK to accept a bottle of wine, some chocolates, or go for lunch. In another scenario, that's contrary to the policies of the employer. You need to exercise prudence. If you’re an employer or a manager, have a talk with your staff about it.”

Member obligations and perception

Kate Dixon, CA ANZ Australian conduct and discipline manager, says gifts can be perceived differently by different people. As a result, it’s important for members to familiarise themselves with their ethical obligations.

Sometimes, people put pressure on others to accept gifts, for example where a gift is not perceived as being of high value, if it is a cultural faux pas not to accept it, or if not accepting the gift will undermine the business relationship. “But you want to go into that with eyes wide open and have some strategies to deal with it,” she says.

Stickney cites a case where a member’s partner was gifted NZ$5000 and some luxury goods from a client.

“It was a conflict of interest. The client had an apprehension that he was on both sides of a transaction, unrelated to the gifts. But I think the broader issue was the partner’s perception. Gifts create a threat or even a perceived threat of self-interest,” she says.

“The code talks about the threat of familiarity, intimidation and self-interest. Sometimes that’s an actual thing where you respond to the influence, but it can also create a perception in the mind of the person offering it that you’ll be more amenable, even if in reality you’re not. That still puts a member in an untenable position.”

What should the member do in that situation?

“Don’t accept it, is one option,” says Stickney. “Most businesses and firms should have policies on this. So, have a look at the code of ethics which has quite extensive provisions both for members in business and members in practice, and they apply whether you're a public practitioner or a provisional member at the start of your career.”

Common traps and practical guidance

If you’re undertaking an engagement where independence is critical, such as independent valuations, audit or insolvency, accepting a gift is not tenable with maintaining your independence, says Dixon.

“That could be different for someone you’ve worked with for years, for whom you’ve done their compilation or taxation accounts, and they give you a bottle of wine or chocolates at the end of the year – or you go out for lunch. It depends on the nature of the engagement, and you need to think very carefully about the appropriateness of that and if there is a genuine feeling of relationship that warrants that kind of gift.”

Dixon cites another case concerning a gift of A$100,000 to an auditor who ultimately failed to recognise and identify the self-interest threat.

“He didn't disclose it. There were breaches of objectivity and independence, and conflict of interest. He was censured, lost his certificate of public practice and was required to do training.”

A key point to remember is that the rules apply, no matter what stage of your career you’re in and that the code has different provisions depending on whether you’re in business or in practice.

“Think about your specific obligations, depending on your role,” says Dixon. “If you’re unsure, declare it to your manager or to CA ANZ.”