Chartered Accountants must lead and champion the ICAS ethical values – the foundations for trust
Every Chartered Accountant (CA) must demonstrate the highest ethical standards to fulfil their profession’s duty to the public interest.
“On the subject of being uncomfortable with the ethical responsibility of leadership, the 2021 Edelman Trust Barometer found that 86 percent of people surveyed worldwide now expect CEOs to speak out on controversial social issues, with almost two-thirds demanding that business leaders take the lead, rather than waiting for governments to act.” Source: Ethical Systems
The COVID-19 pandemic has firstly been a health, social, environmental and financial crisis of immense proportion. Every individual has had to take personal responsibility for behaving appropriately. Every one of us has had a duty to act in the public interest. And we continue to do so.
Second, it is a global economic crisis which will require a revival where leaders across the ecosystem will need to be clearly rooted in a common purpose in the public interest which includes responsible stewardship, and good governance and transparency through effective reporting. The UK Government’s consultation ‘Restoring trust in audit and corporate governance’ published in March 2021 proposes reforms aimed at restoring public trust in the UK’s corporate ecosystem.
Acting in the public interest is not, however, a new concept for the accountancy profession, it is the foundation of the accountancy profession and laid down in the ICAS Royal Charter.
As it states in the ICAS Code of Ethics: “A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest.”
In order to meet this commitment, an obligation is placed upon each and every CA to take individual responsibility for the maintenance of the highest standards of ethical principles throughout their career by adhering to the fundamental ethics principles which are enshrined in the ICAS Code of Ethics.
In 2015, ICAS launched its business ethics initiative – The Power of One – which highlights ethics and integrity are at the heart of the professional responsibilities of ICAS Members.
Regardless of whether a CA is newly qualified or has many years of experience, the five fundamental principles in the ICAS Code of Ethics – 1. integrity; 2. objectivity; 3. professional competence and due care; 4. confidentiality and 5. professional behaviour – should direct individual behaviour and, by doing so, CAs are a force for good in the organisations in which they work to the benefit of our broader society.
Leading the way in ethics
During these uncertain times, and when much of the governmental financial support packages put in place are being funded by taxpayers, the importance for all business decisions to appropriately consider the public interest is paramount.
Whether a CA is making major business decisions, providing advice to businesses, making professional judgements whilst preparing financial statements, or providing assurance on a range of subject matter information, society now, as always, is relying upon the accountancy profession to prepare and provide reliable information by which appropriate decisions can be made.
All CAs, regardless of their role or level of seniority, need to demonstrate ethical leadership – they need to take the lead in relation to their own actions, but also challenge others when challenge is necessary. CAs will be under considerable individual pressures, but the need for ethical leadership could not be greater.
Now that life is starting to return to the “new normal”, society is seeking to learn the lessons of this period of history. There will be reviews into various aspects of the pandemic. The Prime Minister has recently announced that an independent public inquiry will be held in Spring 2022.
While some will focus on the effectiveness of the government response, others will inevitably review the behaviour of business. A likely key focus area will be the outcomes of the various financial relief initiatives that the government has put in place. The level of COVID-related government funding is huge and there is a need for accountability and transparency: did the schemes work as intended; did businesses abuse the schemes that were established; was misinformation provided, etc.
CAs need to support their clients and employers, and manage the pressures being faced by firms or businesses, but this must not come at the extent of breaching any of the fundamental ethics principles. If others are not behaving ethically then a CA cannot just stand by and watch it happen. The right to whistle-blow in specific circumstances is contained in the application material that supports the fundamental principle of confidentiality in the ICAS Code of Ethics.
The need to display moral courage
In ICAS’ Power of One publication Moral Courage, it is recognised that it can be difficult to take the ethical stance. The reality is if anyone suspects impropriety and does nothing, they could be found guilty of condoning it and could potentially be implicated in a scandal at a later date. Ethical leadership requires moral courage.
The Committee on Standards in Public Life report The Continuing Importance of Ethical Standards for Public Service Providers (2018) called “for greater moral courage among key financial and other professionals in securing and maintaining high ethical standards”.
The report references ICAS’ Moral Courage publication and states: “This guidance is essentially a professional manifestation of the Seven Principles of Public Life. The Committee commends the advice to the profession for its compelling and concise encapsulation of the actions those in unique positions of power, influence and insight must take where they witness behaviour that falls short of these Principles.”
Society will vilify those who did not behave appropriately or were involved in abusing the support systems put in place to help people during this time of great sacrifice.
A distinguished career could easily be shattered by acting inappropriately, or by failing to seek to prevent others from acting inappropriately. The consequences of an inappropriate decision could be potentially ruinous for not only the individual, but also their organisation.
Public trust has to be earned. Society will judge business, and the accountancy profession, on its behaviour and actions during this crisis.