Bring ethics back to the professionby
Philip Fisher worries that recent news stories could damage the profession's hard-earned reputation for probity.
When this accountant set out in the industry and, more particularly, started taking exams, he was constantly bombarded by reminders that one of the key tenets of the profession was the need to behave ethically.
At various points in real life, ethical questions have become critical. This has meant offending clients, turning down opportunities to earn big fees and a good few sleepless nights worrying about whether a proposed action was acceptable.
More recently, senior staff and partners in larger firms have probably only had occasional reminders of their ethical obligations, possibly via some kind of video presentation that was designed more like a gameshow than a warning about an issue that could cost you your career or, in extreme circumstances, a great deal of money or even your freedom.
It is always difficult to judge the values of one period against another, but many might have come to the conclusion that today’s accountants are no longer operating with quite the same stringent ethical standards as generations before us.
Last week, AccountingWEB ran two stories that were equally depressing. Mark Taylor's “Three large firm audit probes indicate ‘systematic failure’” included the depressing view of City University accounting expert Professor Atul K Shah:
“The recent spate of audit failures and investigations are no surprise given the neglect of audit quality which has been systemic and compromised by commercial motives of what ought to be ‘public interest’ protecting professional firms”.
As if that wasn’t bad enough, Tallula Brogan must have shocked even hardened observers of our profession with her story entitled “KPMG offers ’untruthful’ defence in Silentnight tribunal”.
The KPMG story is grossly distasteful. It seems, although experts in the field will understand the issues in greater depth, that the firm and/or some of its partners deliberately put a company into liquidation to make fees and then covered up actions that bordered on criminality.
In passing, some might wonder whether the firm’s decision to sell off its business reconstruction arm earlier this year was in any way connected to the scandal and the need to put distance between a respectable accountancy practice and what appears to have been a disreputable unit that might tarnish its reputation.
To make matters worse, these are just the latest in a long litany of embarrassing stories about accountants who fail to even approach ethical standards that should be the bare minimum.
This columnist is frequently asked whether the constant audit failures that have often led to massive losses for stakeholders in failing businesses are the result of ineptitude or something worse. As the mass of scare stories builds, that debate hots up.
On a different tack, earlier in the month Panorama and the Guardian ran the story about The Pandora Papers. For anyone who missed this latest piece of investigative journalism regarding financial wrongdoing primarily centred on tax havens, this was an in-depth look at the way that the mega-rich hide wealth, often illegally acquired, from the authorities and, in many cases, evade taxes by doing so.
Tax avoidance and evasion are further fields in which ethics should be applied on a strict basis. It is becoming increasingly clear that many accountants, and other professionals also, may not apply quite the same standards today that their predecessors did in the past.
This is an area that often gives rise to heated arguments. No one would disagree with the case law principle that everyone can arrange their tax affairs in the most advantageous fashion possible. However, when this involves subterfuge, it is hard to believe that ethical guidelines have not been breached.
What is going on?
It is high time that the ICAEW and its peers across the UK started carrying out wider ethics audits on members.
If partners knew that there was a genuine prospect of getting a hauled over the coals and then drummed out of the brownies, to mix a couple of metaphors, perhaps they would begin to behave ethically again. Otherwise, we will all have to get used to being treated as pariahs by those pursuing respectable professions such as estate agency, the marketing of second-hand cars and loan-sharking.