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Hippocrates
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Accountants should take a Hippocratic Oath

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2nd Feb 2018
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Accountants should make a similar ethical standard pledge to the medical profession, according to Labour’s shadow chancellor John McDonnell, who has called on large firms to force their employees to take a Hippocratic Oath. 

McDonnell aimed his ire at the Big Four, who he believes are not doing enough to tackle tax avoidance. Speaking at the World Economic Forum in Davos last week, McDonnell told the BBC that the Big Four must change their “entire ethos”.

"I think we need a new Hippocratic Oath for [the accountancy firms], where they sign up to being committed to tackling tax avoidance themselves, rather than coming up with all these bizarre schemes to enable that to happen," McDonnell said.

He added that the public is tired of seeing “increasingly complex schemes being cooked up by accountancy firms with a direct interest in obscuring and hiding the earnings of their clients”.

McDonnell has consistently opposed tax avoidance throughout his tenure as shadow chancellor. In the party’s 2017 general election manifesto, McDonnell said a Labour government would pledge £6.5bn towards a tax avoidance programme and another area of the party’s manifesto that garnered attention was its vow to outlaw umbrella companies.  

‘Hippocratic Oath is the wrong request’

But some corners of the profession diagnosed McDonnell's proposal as absurd. “Almost no doctor has ever taken the Hippocratic Oath,” accountant and tax campaigner Richard Murphy told AccountingWEB. "It's the wrong request."

As the husband of a GP, Murphy attests that while no doctor has signed up to a Hippocratic Oath they are heavily regulated, removing the need for such a pledge. However, what is required in the case of the accountancy profession, Murphy added, is a partnership between the taxpayer, their agent and government to make tax compliance easier.

“The government has a duty to make it as easy as possible for the taxpayer to be compliant and I don't think it always does that, and I think that requires a review of the tax system, including simplification which so far we are not seeing.”   

Professional bodies react

While McDonnell wants large firms swearing to the accounting equivalent of Apollo the healer, ICAEW’s chief executive Michael Izza reasoned that such ethical standards have been a “central pillar” in the profession since accountants were granted their Royal Charter nearly 140 years ago.

Responding to McDonnell’s comments in City AM the ICAEW chief wrote: “In addition to being subject to legal requirements, chartered accountants and members of other professional accountancy bodies are also required to follow a professional code of ethics.”

In particular, Izza highlighted how members of the seven professional bodies must already abide by the Professional Conduct in Relation to Tax (PCRT), which HMRC recently used as a framework for its Standard for Agents. "This code, which enshrines fundamental principles like integrity and objectivity, is regularly updated to reflect changes both to the law and the expectations of society."

He concluded that McDonnell should first root out the wrong rather than "those who have been working hard to do what is right", pointing out that a third of registered tax advisers are not required to follow any ethical or professional standards because they are not members of any professional body.

Professional bodies must do more

But for Murphy, Izza’s PCRT response to McDonnell “missed the point”. For a code of conduct within the profession to work it requires a serious change of view from the professional bodies, he said.

“There is no doubt that over the years many firms of accountants have run into trouble, not always in the UK but worldwide, with regards to their professional ethics on tax.

“Many UK-based firms are operating in tax havens where frankly the question arises what they are doing there, why they're there, what it is their clients may be trying to achieve by being there, and whether that activity is consistent with paying the right amount of tax at the right place and at the right time.” 

McDonnell should be focussing on where advisers create risk for their clients, Murphy said, not sensible tax planning that is fair and square with the law. "The accountant's job is to actually present a fair minimum risk to their clients. That to me is the equivalent of 'do no harm'.

“By all means mitigate tax liability within the law, but don't create tax risk. I am aware that schemes are not nearly as prevalent as they were - but there are still arrangements being sold, and an accountant should not be involved in doing that.”

While there is always going to be a risk, Murphy said, advisers should have at least an 85% to 90% belief that their advice is “absolutely watertight that it is going to survive challenge”.

“This clearly changes the balance of judgement,” he said. “It tilts the whole arrangement that suggests the balance of probabilities have to be heavily in favour of likely to be compliant.”

Replies (68)

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By SNOOPDOG
03rd Feb 2018 16:09

I once had a dentist client. Incomplete records.
I had to fill too many gaps .

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By langtron
03rd Feb 2018 17:16

I agree with North East accountant's comment about ICAEW - every year I consider leaving.

But the real irony is that an MP feels qualified to tell others about Ethics. Could the recent problems with the fabric of the houses of parliament be caused by the glasshouse windows breaking?

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By SNOOPDOG
04th Feb 2018 02:58

We as a welfare state nation are in crisis. Nurses and doctors are leaving the NHS. These people do not prepare trial balances profit n loss accounts and tax computations - they save our lives.
My police station is closed for ever and I see no police in my town. Daytime burglary is now an everyday occurrence. My high street has around 40 homeless street sleepers. Knife crime and murder is now common in my quiet town.
A welfare state is about social democracy - free security. Free medical care. Free schooling. But we need the quantum of tax to pay for them. The small business i took to court with HMIT paid for 16 nurses for a year. The austerity programme - the retrenchment of the welfare state has put us all in danger. The Tory boys have cut to the bone and the UK debt has increased.
More tax receipts and renationalisation are the only options. Prisons. The trains. The NHS working for the good not for profit.
It's no good lambasting or ridiculing Jezza and John because we are on the verge of social breakdown trust me. At the moment the Tory regime has no remedial policies - it's a TITANIC governance. Accountancy can assist. Employers can change.
Honesty is the answer. Let us don our red ties and bless our gracious Queen.

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Replying to SNOOPDOG:
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By johnjenkins
05th Feb 2018 09:14

The answer is very simple. Stop messing about trying to get a deal with the EU (it won't happen cos they won't let it). Stop messing about with IR 35 and the like. Leave the self-employed alone. Have a personal allowance that gives the tax payer a proper living (say £15k). Get rid of ERS NIC. Get rid of 40 and 45 percent tax rates and have a basic rate tax that brings in what is needed to run our fantastic country. Then we can choose our Government on a better basis.

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By SNOOPDOG
05th Feb 2018 10:39

Lovely Jubly

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By SNOOPDOG
05th Feb 2018 10:40

Lovely Jubly

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Replying to SNOOPDOG:
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By johnjenkins
05th Feb 2018 11:47

Why was it that one side was easy to suck the orange through and the other side you could only lick?

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Replying to johnjenkins:
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By SNOOPDOG
05th Feb 2018 17:52

Those were the days - nominal ledgers, journals, the petty cash " imprest " system and mouth watering jublies.

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By SNOOPDOG
04th Feb 2018 13:05

Employee auditors do not need to take the oath. What they need is to grasp the concept of double entry which forms the basis of producing correct final accounts. You would not believe the mistakes I have seen by audit staff on a clients premises.
They also need to communicate to their boss anything strange. Eg.why is the precedent acting partner taxpayer personally creating manual transactions to reduce the business profit when the total system is computerised. Further, all transactions are executed by office staff.
Once I did a subcontract job for someone - an abattoir. Here I found that the aggregate of cash expenses and lodgments to bank exceeded the receipt side of the cash book by £200000. This £200000 was therefore " off the record takings "
I told the Acting accountant. He said ' hush'. The following week the Accountant came out of the abattoir with 4 boxes of joints of meat.

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By User deleted
05th Feb 2018 21:36

If some took exams that would be a good start - and a good way to show some respect to the profession.

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By mickeyparish
08th Feb 2018 17:38

Hippocratic Oath: Cambridge dictionary definition :

"a promise made by people when they become doctors to do everything possible to help their patients and to have high moral standards in their work"

I don't see anywhere that mentions, say, helping the government save money rather than spending it on patients' needs. That would be the "Hippocratic" equivalent of accountants helping the goverment maximise their tax take rather than helping their clients minimise their tax bill.

Tax and goverment expenditure are political issues, and it is not helpful to add moral or ethical dimensions to the debate on tax.

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By Chandres
23rd Apr 2018 13:29

As a PhD candidate currently studying Ethics in Accounting both Izza and McDonnell have some valid points. However, Murphy's comments are very much relevant and hit the mark.

At a wedding in 2016, some fellow guests asked me what area I was researching? I stated: "Ethics and Accounting", before declaring the full title (Is UK Accounting education/training overly focused on profit/wealth maximisation at the expense of ethics? What are the values being taught in accounting education/training?), they were all cynically laughing or sniggering.

The guests were professionals in other fields and non-professionals. Essentially they were members of society. The perception they have is that Accountants and the profession are not ethical and they serve the interests of its clients, with little regard for society.

This perception is somewhat contrary to the hard work and effort in devising the code over decades, see 'Developing a Code of Ethics for Professional Accountants from 1977 to 2006', Amanda Sonnerfeldt and Anne Loft.

Personally, I have found that the professional bodies and firms have not been forthcoming in exploring ethics from different lenses. A survey I am currently running has received very little support, which is a shame, as we could all learn a great deal.

If anyone is interested, I am happy to send a preview of the survey ([email protected])

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Replying to Chandres:
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By johnjenkins
23rd Apr 2018 15:44

The problem, Chandres, is that people like myself were trained in the mid 60's where ethics was of paramount importance (not only in Accountancy). Over the years values have diminished (not only in Accountancy).
Now (some might not agree) I put it down to a number of things. The first being Interest rates being allowed to soar after the property collapse of the early 90's (may even been late 80's) caused by the vacating of the £50k personal mortgage allowance. The amount of good business that went down the pan due to financial institutions snatching property (bankruptcy was a no go area unti this) and causing mayhem with many bankruptcies. Then along came Gordon Brown with his destruction of the small business and infamous IR35. The EU sticking their noses in. So in short the business climate (especially the relationship between Accountants and HMRC) isn't really what it should be. That's without the internet scams and MTD.
So when a profession is hit as hard as we have been it is little wonder the "perception" might not be "kosha".

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Replying to johnjenkins:
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By Chandres
23rd Apr 2018 17:35

Thanks, John Jenkins for your insight esp. from the 60's. Judging by my research so far, it is not only the relationship between Accounting and the HMRC which needs strengthening but also other parties too...

If at all possible, I would like Early Career Professionals in Accounting to complete my questionnaire. I would appreciate if you can email me for further details and a preview of my questionnaire, which has full ethics approval from Queen Mary University of London ([email protected]).

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Replying to Chandres:
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By johnjenkins
24th Apr 2018 08:57

I have had a look through your questionnaire and the thing that struck me is that there is no relevance to how the Structure of the Accountancy profession has changed in the last 50 years. One example is that there are more "one man bands" than there used to be. The tax system has changed dramatically. The influence of the EU on work practices. So ECP's will not have that experience to make judgements of ethics as they would have nothing to compare it with (that's not dissing your efforts). To get the full picture you would need to base the survey on 3 areas. 60's early 80's. Late 80's early 10's and the one you have issued. Combine them and you will get a great understanding as to what has happened in business.

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Replying to johnjenkins:
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By Chandres
24th Apr 2018 16:57

Hi John,
Thanks for having a look.

I must make it clear, the purpose of my study is not historical, I guess I did not make that clear, then again this is a blog.

If you require further, full details of the purpose and scope of my research, feel free to email me. However, if you believe you can distribute for me, I would be highly appreciative.
Chandres

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By Chandres
23rd Apr 2018 19:16

Dear all,

Having received a couple of emails, I thought I would send the following about my research, hopefully, you can help me and Accounting.

My name is Chandres Tejura and I am a PhD student at Queen Mary University of London (QMUL).
I am certain, as are others that it will benefit your accounting firm/dept.

The focus of the research project is to examine the extent to which ethical values are taught and understood by a cohort which represents the future of accounting and decision-makers, Early Career Professionals (ECPs). The research aims to understand the values taught in degrees, training and to what extent the cohort believe Ethics is important within their work environment, in Accounting and shaped by it.

The questionnaire, in its design, has received critical acclaim from academics and professionals from the UK to Australia.

Below is a preview and thereafter the message in bold which contains a link to my survey, and needs to be sent to potential participants working in the UK.

PREVIEW of the questionnaire. Please tick, 'ignore validation':

https://eu.qualtrics.com/SE/?SID=SV_0rBAxgImyZXibGt&Q_CHL=preview&Q_Mobi...

ACTUAL LIVE SURVEY:
If you're working in the accounting field, having graduated (undergraduate degree studied in the UK) or entered it in the last 4 years (in the UK), I need you to complete and distribute the anonymous survey to your fellow colleagues, click or copy and paste:

https://qmulbusiness.qualtrics.com/jfe/form/SV_0rBAxgImyZXibGt

Thank you,
Regards,
Chandres
([email protected])

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By tramp
24th Apr 2018 10:14

Did I see somewhere a suggestion that accountants should take the Hippocratic oath, or equivalent? I know that Doctors, (medical), do this at some point and in my experience they are lying, emotionally suppressed, (i'm thinking Spock), selfish statisticians not exactly role models then, thank goodness for that we do not need any more Harold Shipman likes.

I do think that more accountability may help weed out the less professional and provide some protection to those SME's and sole traders who fall victim to them. At present all liability is on the business

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