CIFA Professional Ethics and Governance KASNEB Notes

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This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her demonstrate adherence to good governance and ethical practices in practice

A candidate who passes this paper should be able to:

  • Identify ethical issues and determine when ethical principles apply
  • Analyse alternative courses of action and apply the fundamental ethical principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour to ethical dilemmas and determine an appropriate approach.
  • Adhere to laws, professional standards and policies and the rules of professional conduct when exercising professional judgement
  • Practice the tenets and principles of good governance
  • Identify violations of the code and standards, and recommend the best measure for correction
  • Develop and maintain knowledge of emerging local and global codes of ethics and practices


  1. Overview of Professional Ethics
    1.1 Definitions of ethics, the good as the last end, the common good, ethical norms,
    morality, values and ethical conduct, conscience and levels of conscience
    1.2 Ethical philosophy, principles
    1.3 Ethics and professionalism
    1.4 Definition of Business Ethics and Corporate Ethics
    1.5 Benefits and importance of ethical conduct in the investment industry
    1.6 Ethics and law
    1.7 Challenges to ethical behaviour and ethical dilemma
    1.8 Ethical decision making framework
    1.9 Code of ethics and professional standards – ICIFA
    1.10 Code of ethics versus code of conduct
    1.11 Role of a code of ethics in defining a profession
  2. Ethical Theories
    2.1 Moral development (theories): Kohlberg Theory; Gilligan’s Theory
    2.2 Consequentialist Theories: Utilitarian; Egoistic; Common Good
    2.3 Non-consequentialist Theories: duty-based; the rights; the fairness or justice, the
    divine command
    2.4 Agent-centred theories: the virtue; the feminist
    2.5 Applied Ethics: terms used in ethical judgments; obligatory,
    impermissible, permissible, supererogatory
    2.6 Framework for ethical decision making: the consequentialist framework; the duty
    framework; the virtue framework
  1. Ethics and the Investment Industry
    3.1 Need for high ethical standards in the investment industry and why it matters
    3.2 Types of investment fraud
    3.3 Ethics, Society, and the Capital Markets
    3.4 Capital Market Sustainability and the Actions of market players
    3.5 Relationship between ethical and legal standards

3.6 Commitment to Ethics by Firms
3.7 Applying the ethical framework
3.8 The standards of professional conduct
3.9 An ongoing commitment to professional competence: ethical decisions in the stock market; short selling, pump and dump, insider trading, bucketing, false trading, cornering

3.10 Factors influencing business ethics
3.11 Establishing ethics and trust in the investment industry

  1. Generally Accepted Codes of ethics and Standards of Professional Conduct
    4.1 Professionalism
    4.2 Concerns of professional ethics
    4.3 Integrity of Capital Markets
    4.4 Duties to clients
    4.5 Duties to employers
    4.6 Investment analysis, recommendation and actions
    4.7 Conflict of interest
    4.8 Code of ethics for various professionals: ICIFA code of conduct, standards
    and ethics; Stewardship Code for Institutional Investors 2017; The code of corporate governance
    practices for issuers of securities to the public 2015
    4.9 King IV Report on Corporate Governance
    4.10 The revised Organisation for Economic Co-operation and Development (OECD) principles of
    corporate governance and their relevance to non-OECD countries
    4.11 Cadbury Report of the committee on the financial aspects of corporate
    4.12 The Hampel committee on corporate governance
  2. Global Investment performance standards (GIPS)
    5.1 The genesis of the GIPS standards
    5.2 Construction and purpose of composites in performance reporting
    5.3 Requirement for verification
    5.4 Structure of the GIPS standards
    5.5 Benefits from compliance
    5.6 Features of the GIPS standards and the fundamental of compliance
    5.7 Scope of the GIPS standards with respect to investments firms
    5.8 Implementation of GIPS standards in countries and conflicts with local regulations
    5.9 The nine major sections of the GIPS standards
  1. Overview of Governance
    6.1 Definition of governance
    6.2 Principles of Governance
    6.3 Importance of Governance
    6.4 Governance and Management
    6.5 Ethical Leadership
    6.6 Codes of governance
    6.7 Importance of Codes of Governance
    6.8 Corporate Governance Concepts
    6.9 Historical overview of Corporate Governance
    6.10 Inter-relationship between Business Ethics and Corporate Governance
    6.11 Governance and the Law
    6.12 Role of the board in promotion of ethical conduct
  1. Theories of Corporate Governance
    7.1 The Agency Dilemma
    7.2 Agency Theory
    7.3 Stewardship Theory
    7.4 Resource Dependency Theory
    7.5 Stakeholder Theory
    7.6 Transaction Cost Theory
    7.7 Political Theory
  2. Emotional Intelligence
    8.1 Definition of emotional intelligence (EQ)
    8.2 Components of emotional intelligence
    8.3 Signs of High Emotional Intelligence
    8.4 The Importance of Emotional Intelligence in a Leader
  3. Accountability, Risk Management and Internal Control
    9.1 Ethical risk and how to manage it
    9.2 The Fraud Triangle Theory
    9.3 Traditional Risk Theory applied to ethical risk
    9.4 Financial reporting
    9.5 Integrated reporting
    9.6 Strategies and processes in enterprise risk management
    9.7 Board’s role in enterprise risk management
    9.8 Internal controls
    9.9 Audit Committee
    9.10 External auditor
    9.11 Internal audit charter and work plan
  4. Stakeholders Management
    10.1 Stakeholder groups
    10.2 Shareholders and stakeholder rights and interests
    10.3 Shareholders and stakeholder obligations
    10.4 Minority shareholders
    10.5 Stakeholders engagement
    10.6 Stakeholders dispute resolution
    10.7 Shareholders association and education
    10.8 The Role of institutional investors in corporate governance
    10.9 Institutional investors’ relationship with investee companies
  5. Case Studies in Professional Values and Governance
    11.1 Importance of case studies
    11.2 Using ethical concepts to analyze case studies
    11.3 Practical professional ethical study cases
    11.4 Enron scandal
    11.5 Case studies on select stock brokerage firms and banks
  6. Contemporary Issues and emerging trends
    12.1 Impact and inter-relationships between social media and professional ethics and
    governance, how much should employees post, technology, racial discrimination
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