Where have things gone wrong for accountants?

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Has professional integrity in the accountancy profession gone down the tubes? Freddy Kabini asks.

You may not have met or spoken to them yet, but the mere mention of their profession sends the shiver down your spine. It makes you think of your own mortality. "There is something of the night about them", as Ann Widdecombe, former Tory MP would put it. They are regarded with dread the world over. But with the recent image make-over, it seems they have been given a new lease of life. The public loves them more than accountants and lawyers. Recently, there was even an entire TV series dedicated to them - "Six Feet Under".

They are of course Funeral Undertakers! No, I don’t mean the Insolvency Practitioners. I mean the Morticians.

The latest Gallup survey that was conducted on 7 – 9 November 2008 shows that Funeral Directors are held in high esteem: 47% of Americans surveyed gave them a very high/high rating in Ethics and Integrity compared to 38% for accountants. There are suspicions from some quarters that the sample may not have been representative as it may have included dead people or corpses who obviously would rate Funeral Directors favourably but I think this is just sour grapes from the professions who have lost favour with the general public in recent years. Those surveyed had a beating heart and had nothing against accountants. It is worth noting that the Morticians have beaten accountants for the second year running and there is no sign of them letting up. The ACCA has set up shop in America recently to shake things up a little. Who knows? Maybe the image of bean-counters will change.

Have accountants in this country suffered a loss of public confidence to the same extent as their US counterparts? I hope not. Where has the accounting profession gone wrong? Could this be the fallout from the Enron and Arthur Anderson scandal? For those who may have forgotten, Arthur Anderson was once one of the "Big Five" accounting firms alongside PricewaterhouseCoopers, Deloitte, Ernst & Young and KPMG. In 2002, the firm was found guilty of criminal charges relating to it's handling of the audit of Enron.

If the results of the Gallup poll are repeated here in the UK, I will seriously consider retraining as a Nurse or High school teacher. It is one thing for one’s profession to be portrayed by the media as being both dull and boring but it is another for it to be perceived by the general public as lacking in honesty and ethics.

I have always assumed that accountants were amongst the most admired professionals such as nurses, pharmacists, high school teachers, medical doctors, members of the clergy and the police in terms of honesty and integrity but obviously I was wrong. The only consolation is that at 38%, accountants rank higher than lawyers (25%), journalists (18%), MP’s (12%), stockbrokers (12%), advertising practitioners (10%), business executives (12%), estate agents (17%) and trade union leaders (16%).

It is not surprising to see bankers taking a heavy battering this year. Everybody knows that the global economy is in a mess because of them and as a result, only 23% of Americans rate them high and very high in honesty and integrity. In contrast, in 2007 their rating was 35%. While their rating has declined this year, it’s still a lot higher than for MPs and lawyers.

The least admired professions are lobbyists (5%), telemarketers (5%) and car salesmen (7%).

The results are based on telephone interviews conducted on 7 – 9 November 2008 amongst a nationally representative sample of 1,010 American adults aged 18 and older.

Respondents were asked to answer the following simple question:

How would you rate the honesty and ethical standards of people in these different fields – very high/high, average, low/very low?

Here is a summary of the results taken from the Gallup poll:

Gallup Poll Results

Survey conducted on 7 -9 November 2008

Very high/High Average Low/Very low No opinion
% % % %
Nurses 84 14 1 *
Druggists/Pharmacists 70 27 4 *
High school teacher 65 30 5 1
Medical doctors 64 30 6 *
Clergy 56 33 8 3
Policemen 56 35 9 0
Funeral directors 47 40 8 5
Accountants 38 51 8 2
Journalists 25 44 31 1
Bankers 23 53 23 *
Building contractors 22 55 20 2
Lawyers 18 45 37 1
Estate Agents 17 57 25 2
Trade union leaders 16 45 35 4
Business executives 12 49 37 1
MPs 12 40 46 1
Stockbrokers 12 40 45 3
Advertising
practitioners 10 49 38 3
Car salesmen 7 39 54 1
Telemarketers 5 33 60 2
Lobbyists 5 27 64 5

* Less than 0.5%

Freddy Kabini

About kabini

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avatar
03rd Mar 2009 09:31

Our reputation
All the scandals don't help, but we do need to consider how our behaviour affects public perception. Of course, most of us are bright, articulate and savvy. But too many don't develop their inter-personal skils adequately and reinforce the stereotype of the dull, unimaginative accountant.

It's the unqualified group, previously referred to, that are the biggest problem here.

There's more on developing a political sense at http://www.ciceroguides.com/Managing_Your_MD.php?doc_id=3

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By Anonymous
23rd Feb 2009 08:51

UK survey
A survey carried out by BBC Today programme on 29/05/02 found that the top ten least respected professions, listed in order, were:

MP
Estate agent
Government minister
Lawyer
Journalist
Footballer
Advertising executive
Car dealer
Company director
Accountant

The top ten most respected professions, listed in order, were:

Doctor
Nurse
Teacher
Fireman
Paramedic
Army/Navy/RAF
Scientist
Ambulance driver
Police officer
Care assistant

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By Anonymous
22nd Dec 2008 13:37

Creeping Americanisation
The typical American outlook on life differs to that of the typical British person. Over the last few years we have received what is worst of the American way of life, fast food restaurants, creeping litigious behaviour, US television broadcasting, which has all had a negative impact on British society.

This may of course mean that the survey results may be vastly different in the UK. I for one do not rate Nurses highly in the honesty stakes, neither teachers, chemists or Scout Masters(not on the list)!

Bank managers of the type of Capt Mannering out of Dads Army are few and far between. He maintained his position in Dads Army & in society in general due to his appointment at the bank. He may have been pompous but his heart and honesty and integrity were never in doubt. The like may be now gone but not forgotton. if only bankers could behave with such integrity (and less stupidity) now.

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By Anonymous
22nd Dec 2008 10:44

David
Madfoff is irrelevant.

I was thinking about:

http://en.wikipedia.org/wiki/Accounting_scandals

**Big Four major audit firms (Audit firms are listed, followed by select clients ensnarled by accounting scandals)**:

Deloitte & Touche: Adelphia, AES, Duke Energy, El Paso, Merrill Lynch, Reliant Energy, Rite Aid, Parmalat

Ernst & Young: AOL Time Warner, Dollar General, PNC Bank, Cendant, HealthSouth

KPMG: Citigroup, Computer Associates, ImClone, Lernout and Hauspie, New Century, Peregrine, Xerox, Siemens AG, Banco Nacional S.A. (Brazil), BMW Group

PricewaterhouseCoopers: Bristol Myers, HPL, JP Morgan Chase, Kmart, Lucent, MicroStrategy, Network Associates, NKFS, Tyco

**Predecessor and other U.S. audit firms**

Arthur Andersen: CMS, Cornell, Dynegy, Enron, Global Crossing, Halliburton, Liberate Technologies, Martha Stewart Living Omnimedia, Merck, Peregrine, Qwest, Sunbeam Products, Waste Management, Inc., WorldCom.

Coopers & Lybrand LLP: Network Associates, Phar-Mor.

Gutierrez & Co.: Vivendi

Grant Thornton: Parmalat

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By Anonymous
21st Dec 2008 16:52

One should never be complacent
But actually I don't think we have come out too badly in that poll. 89% rate accountants at average or above. Given the problems that there have been (Enron etc), I am surprised at how few rated accountants in the very low category. Our rating is much better than that of most of my clients.

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21st Dec 2008 10:19


Reggie

As it happens the auditors of Madoff's organisation and funds were not one of the major accountancy firms - so this latest US scandal does not involve the major firms directly.

However the big firms were auditors of some of the firms and funds that had invested money with Madoff and so the big firms may be subject to some 'second generation' claims.

Madoff's own auditors were a tiny firm consisting of two partners - one of whom was virtually retired.

One might ask why such a small firm was auditing such a significant client, and whether fees from that one client formed a major part of the total fees earned by the firm - but those are other issues.

In any event the auditors were, I think, a CPA firm (just like the major US audit firms).

The Gallup poll was however taken before the Madoff scandal came to light.

David

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By Anonymous
19th Dec 2008 23:15

So Mr Potykins
The audit scandals we've seen in the last decade involving some of the largest accountancy firms. We're they the ICPA members that are lowering the standard then? No! What rubbish!

Its those big stories that grab the public's attention and shapes their views. We've seen on numerous ocassions now just how effective the profession is at regulating itself.

Integrity and objectivity is assured by CCAB membership then. Really?

I didn't think accountants came out too bad. People will always be wary of those professions that are aloof and work in a way they don't understand and make no attempt to explain themselves in plain English. Hopefully these things are changing.

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19th Dec 2008 22:10

It doesn't add up.
Undertakers can bury their mistakes; accountants can't because they leave an audit trail.

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By Anonymous
14th Dec 2008 13:34

Gallup poll???
Sadly, the Gallup poll does not distinguish between CPA’s and accountants who are not CPA's.

If you lump all accountants together regardless of whether they are qualified or unqualified, a rating such as this is unavoidable. Like Chartered Accountants here in the UK, CPA’s enjoy a high reputation in the US and around the world.

As organisations who represent unqualified accountants in the UK (e.g. ICPA) continue to grow, I expect the public’s perception of accountants to get worse in the coming years. The general public has to be made aware of the distinction.

Please bear in mind that professional accountants who are members of recognised accountancy bodies are required to comply with the following fundamental principles:

Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour

I am doubtful whether the general public is aware of this.

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By Anonymous
19th Dec 2008 14:48

Where is the positive spin?
Why do we always have to look at the negative side? Let's take a more positive stance.

Accountants were only rated low or very low by 8% of the respondents which is massively better than bankers, lawyers and MP's, better than policemen and on a par with the clergy and funeral directors. The public may not believe us to be highly ethical but neither do they think we are highly unethical!

Far from considering where it all went wrong we should be congratulating ourselves on a being 'up there' with the mainly public sector/caring professions.

Is it any great surprise that nurses et al are regarded as being highly ethical and acting with integrity? To not care for someone properly is likely to be negligent or lazy but hardly unethical.

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19th Dec 2008 14:16

Virtues and deadly sins
Ok, Mr Potkins, but it was thoroughly qulaifed accountants who gave a clean bill of health to:

Enron
Parmalat
Northern rock
all the other basket case banks
that 50Billion dollar fraud in the US

I could go on, but it's getting boring.

The frightening thing is that the unqualified acountants who have not been responsible for any of these crimes may actually be improving the credibility rating for accountants.

Let us bear in mind that all the virtues you refer to appear to have been conspicuous only in their absence when it comes to the firms involved in the above.

Pharisee, before attemting to remove the mote from your unqualified neighbour's eye, remove the plank from your own. (Biblical refernence appropriate to the season!)


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