Ethics for finance professionals

BY JANET R PLUMMER

Wednesday, September 13, 2017

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Ethics (an individual's moral judgements about right and wrong) is important to businesses for many reasons. Given the complexity of many financial transactions, as well as the importance of best practice to business and society, professional bodies such as the Association of Chartered Certified Accountants (ACCA) have a particular responsibility to uphold and lead on ethical issues.

This is especially crucial in today's business landscape as members of the public and clients trust professionals in all fields to commit to a high standard of ethical behaviour, and expect that they will always 'do the right thing'. Ethics plays a crucial role in everything that accountants and finance professionals do.

Ethics and trust in a digital age, ACCA's recent global study of 10,000 professional accountants, found that 95 per cent of those at the chief financial officer level or higher believe ethics is very important to their company's reputation, internally and externally.

That commitment grows because they recognise that in today's automated age, human judgement becomes more integral to how decisions are made. When faced with a data breach or a company's exposure to supply chain irregularities, customers and investors won't look to a systems bot to blame.

Whilst the rise of robots has been flagged as a threat to professions, it actually represents a new frontier where the skills and judgement of professionals are critical.

Accountants are therefore set to remain at the front line of ethical challenges in business.

The five fundamental ethical principles set out by ACCA are:

1. Integrity — being straightforward and honest in all professional and business relationships;

2. Objectivity — not allowing bias, conflicts of interest, or undue influence of others to override professional or business judgements;

3. Professional competence and due care — to maintain professional knowledge and skill at a level required to ensure that a client or employer receives competent professional service;

4. Confidentiality — to respect the confidentiality of information acquired as a result of professional and business relationships; and

5. Professional behaviour — to comply with relevant laws and regulations, and avoid any action that discredits the profession.

While the code acts as a guide for behaviour, in order to stay vigilant to omissions, errors and deliberate accounting violations, all professional accountants also need to develop and balance necessary professional quotients to fit their role and stage of career.

Finance professionals must think and behave with integrity, independence and professional scepticism. They must also demonstrate this to stakeholders including: regulators, investors, colleagues, and entities that are the subject of audit and assurance engagements. There is also a need for vigilance in observing and applying local and international laws, regulations and standards relating to engagements for the audit and assurance of historical financial statements and other subject matters — such as International Standards on Auditing (ISAs), federal company laws, and regulations on data protection.

There are wider business issues when it comes to ethics, and ethics underpins everything professional accountants do. An ethical dilemma may be resolved by applying a conceptual framework. However, in order to achieve this we first need to understand fundamental ethical principles so we can ensure there's minimal risk of them being undermined.

In the global fight against corruption in all its forms, it is vitally important that employees are made to feel that wrongdoing will be dealt with promptly, fairly and in a transparent manner. This isn't just the right thing to do; it is also best for the business and its employees.

In order to foster a successful speak-up arrangement, organisations need to consider how the arrangement interacts with cultural issues. Potential whistle-blowers must have a clear view of not only the avenues available for speaking up, but also the full path ahead of them as they go through the whistleblowing journey.

Additionally, it is highly worth businesses considering the use of an external independent channel that sits alongside their internal conduits. It may feel counter-intuitive to set up channels that are external and possibly more formal when you are trying to build trust internally. However, if people use independent external channels and have a positive experience, the trust developed from the experience can transfer to others, including internal channels that they may use in the future.

Now more than ever, how an organisation does business is just as important as the results they achieve. It's no secret that many of the great reputational disasters of recent years have been made worse by attempts to sweep them under the rug. If effective speak-up arrangements are implemented throughout corporate governance, public sector accountability and professional responsibility, it will create robust risk management, which is in an organisation's highest interest.

Businesses that are successful in today's environment and which intend to remain viable in the future must hire finance professionals who possess the necessary skills to carry out their roles and are committed to abiding by the ethical code of conduct of their professional body; and provide the framework for employees to report instances of misconduct and fraud.

Warren Buffet advises business owners that, “In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don't have the first, the other two will kill you.” And Oprah Winfrey's word to the professional in business is: “Real integrity is doing the right thing, knowing that nobody's going to know whether you did it or not.”

Janet R Plummer, FCCA, FCA is a chartered accountant and is the subject matter expert for audit on Tax Administration Jamaica's integrated tax administration system. She is a member of Council of Institute of Chartered Accountants of Jamaica and serves as chair of the Public Sector Committee.

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