If we are an employed corporate treasurer, we have duties towards our employer, fellow employees , our employer's bankers and others. In self-employed role we have analogous duties, most importantly to our clients.

These interests of the various diverse groups that treasurers are responsible towards can come into conflict. These conflicts of interest give rise to ethical challenges. They also pose 'agency' risks to the business.


Agency risk arises whenever employed treasurers and other managers don't own the businesses they manage. This is usually the case in larger and more complex organisations, including almost all corporates that have a separate treasury function. Agency risk can lead to managers allowing their self-interest to interfere with their primary role of serving the organisation, and especially its owners, who are known in the agency model as the 'principals'.

Simple examples include fraud and excessive pay. 

More subtle examples include suboptimal capital structuring, especially with too much equity. Another agenecy risk is empire bulding, particularly through ill-advised acquisitions.

Requiring treasurers and other senior managers to follow appropriate codes of conduct and ethics can be an effective part of mitigating agency risks.


The ACT publishes a mandatory Ethical Code for all members and students. The Code establishes seven fundamental principles governing members' conduct, and referring to them can help us identify and resolve many ethical problems.

View Ethical Code


The first fundamental principle is integrity. Integrity includes avoiding any conflict between our private self-interest and the interests of our employer or clients. Our employers or clients must come before our self-interest.


Integrity includes avoiding misleading external parties, including banks and other lenders. Misleading can mean omittting materials adverse information, as well as outright misstatements.

For this reason, integrity may require us to disclose such adverse information to our employer's lenders. However, we also have a fundamental duty of confidentiality. Common situtations where these and other duties may come into conflict include M&As and turnarounds.


There may be occasions when we cannot resolve ethical problems on our own. We should take advice when appropriate. Advice can be from colleagues or independent legal advisers, or you can access the ACT's ethics resources.

Ethics Resources



How would you respond to the following situation: 

Your fictional boss has just ordered you to do something you know to be a breach of the ACT's Ethical Code. 

(Check your answer below.*


Another fundamental principle of the Code is establishing and maintaining our professional competence. Our competence must be appropriate to our seniority and the responsibilities of our role. You can use the ACT Competency Framework to identify the level of competencies you need.

ACT Competency Framework



Author: Doug Williamson

Source: The Treasurer magazine

Our ACT training on ethics should guide us to do what is best for the company and act according to our professional standards.
Nav Batish, Group Treasurer, Virgin


'Resign' is a popular initial response to the ethical problem described above. Better responses include you, as the treasurer, engaging in discussion with your fictional boss, ideally persuading them why we should comply with the Code.