In the wake of recent events including prurient TV programmes and newspaper articles about The Paradise Papers and sexual harassment scandals in Parliament and beyond the public will soon conclude that professionals are capable of behaving very unprofessionally.
Accountants and lawyers have been involving themselves in scheming of a kind that looks bad, even if it might just about be legitimate for generations but are now being taken to task for it. There have also been far too many situations where companies have failed despite clean audit report or, at the very least, had to restate their beautifully overdressed accounts.
While MPs are not by definition professionals, a very high proportion are lawyers, accountants and the like. It was bad enough when they were fiddling their expenses but fiddling with their colleagues is an even worse advert for those who should be providing examples to us all.
From our perspective, the ICAEW’s code of ethics is as good a place to start as any, since members of other accountancy bodies will have very similar obligations. It starts with a series of fundamental principles and in particular for the purpose of this article it is worth focusing on
To be straightforward and honest in all professional and business relationships.
To comply with relevant laws and regulations and avoid any action that discredits the profession.
I fully accept that there will always be grey areas where some believe that they have maintained integrity and behaved professionally, while others (frequently clients who believe that they have lost out) would disagree.
However, in my eyes, if recent media commentary is in any way accurate, some of our colleagues would be struggling to keep a straight face while claiming to have complied with these obligations.
I have written about the standard of auditing before and no doubt will do so again but on far too many occasions auditors seem to be failing, apparently using practices that are not rigorous enough to protect the stakeholders who are effectively employing them. How a global corporation like Tesco could be presenting accounts that were grossly misleading without the auditors sniffing out a problem is beyond me. I know that the only requirement is to confirm that the accounts show a true and fair view but surely those of us with integrity would imagine that we need to do enough to prove that accounts are not way off beam.
When it comes to tax, I always seem to cause a rumpus when questioning professional standards applied by some accountants, solicitors and particularly barristers. Constantly, schemes are devised where there is significant doubt as to whether or not they will work. In the forms of time, many of these have been proved to be flawed, while others await investigation. Accountants hide behind counsel opinions, some of which makes one wonder whether those delivering them are obliged to comply with any kind of ethical standards.
I have to say that I regard wholly artificial schemes with no purpose other than tax saving as unacceptable from an ethical viewpoint. The courts are beginning to take a similar stance, which means that many schemes which might just about have been regarded as viable in the past will not be in future.
Going a stage further, in moments of depression I sometimes wonder whether the main measures used by professionals in determining the applicability of tax planning arrangements include
- Can I get an embarrassingly large fee?
- Can I get a QC to sign the arrangement off?
- Will the clients sign a disclaimer saying that they know the scheme is quite likely to fail and won’t take action against my firm if it does?
- Will HMRC ever bother to investigate, even if the scheme doesn’t necessarily work?
Surely the most important question is can the arrangement be regarded as ethical? In addition, reputational risk might eventually begin to tell, if only a desire to avoid having your name publicised should a court or professional body take appropriate action.
I still carry my professional accounting qualification with pride but have to say that if the industry keeps moving as it has in recent years, it won’t be long before I worry about having to confess to being involved in a trade that has a reputation for bordering on the unethical.
About The Imprudent Accountant
Someone who should know better, but can't resist the occasional rant about the more exasperating aspects of the accountancy profession.