GFOA Code of Professional Ethics: anchor in a sea of change.

• Author: Johnson, Eric R.
• Position: Government financial officers offered new ethics code

The integrity of financial professionals recently has come under attack in the wake of a series of corporate accounting scandals. Finance officers must assign renewed emphasis to the GEOA Code of Professional Ethics if they are to maintain the confidence of government stake holders.

In a period when corporate accounting practices and financial disclosures have sensitized the nation to illegal and unethical behavior, government finance officers face a significant challenge in maintaining the trust of bondholders, taxpayers, customers, and other stakeholders. Although recent media attention has focused on corporate wrongdoings, government is not without its own cases of mismanagement, lack of integrity, and fraud. Such cases can taint an individual's career and damage the reputation of the organization he or she represents (or, more likely, used to represent). Even when a public official is cleared of charges of malfeasance--whether on the merits or on a technicality--public mistrust of both the individual and the organization can linger indefinitely.

Issues and circumstances much less sensational than those that surface in the media can challenge professional integrity. Indeed, the so-called "little things" are much more likely to trip up the average finance professional than behavior that is clearly outside the lines of ethical conduct. The GFOA Code of Professional Ethics addresses ethical issues both large and small, providing a useful benchmark against which government finance officers can measure their professional integrity. This article reviews this important yet often overlooked document.

First Some Perspective

In 1938, GFOA's predecessor, the Municipal Finance Officers Association, adopted the first code of ethics for the public finance profession. As with other such codes of that era, the MFOA code reflected expectations of conduct, but was not specific enough to provide practical guidance. (1) In 1987, the GFOA Executive Board established an ad hoc ethics committee to update the 49-year-old Code of Professional Ethics. Then-President Betty Jo Harker appointed the members of the committee, with Past President John Walsh serving as the chair. Following a series of internal drafts, the committee issued an exposure draft in May 1988 that was sent to all GFOA members for feedback. A revised code was approved by the membership at the annual conference in Seattle on June 6, 1989. The new code enjoined government finance officers "to adhere to legal, moral, and professional standards of conduct in the fulfillment of their professional responsibilities. " (2)

A code of ethics is one of the factors that differentiate professions from other skilled occupations. Many other professional associations have adopted codes of ethics specific to their needs. For government finance officials, the GFOA Code of Professional Ethics supplements any existing civil and criminal statutes restricting the conduct of government officials, including finance officials. Statutory restrictions set limits that, if violated, may result in civil action or criminal prosecution. Statutory constraints are important, but they often set relatively low standards for acceptable behavior. A professional who meets minimum statutory requirements may be safe from prosecution, but may still be viewed as unethical in his or her conduct and may subject his or her organization to the same label.

As a supplement to statutory requirements, the adoption of a code of ethics encourages a higher standard of conduct by the members of a profession. It is important to note that like other codes of ethics, the GFOA Code of Professional Ethics stops short of specifying limits. This is analogous to hurdle events in track and...