‘Tis the season to be jolly’…Whether you believe in Christmas or not, the holiday season is typically celebrated in all Caribbean islands close to the end of a calendar year, and Jamaica is no exception. Bright lights, persuasive sales campaigns, parties and hoping you are on the right side of the ‘naughty or nice’ list… it is usually the time to make merry, entertain, give and receive gifts from family, friends and clients.

Of course, we can and do buy gifts all year round for any occasion as a way to express our appreciation of the receiver. However, in the public sector and wider corporate world, gift giving might connote unethical practices.

Before we look into the unethical issues around obtaining a gift from a client, another factor to carefully consider is whether an item is a gift or can be labelled as entertainment.

GIFT VS ENTERTAINMENT

Under guidelines set by the Association of Certified and Chartered Accountants (ACCA), a chartered accountant must first determine if an item is a gift or entertainment in order to determine the rules related to the item. ACCA states that gifts differ from entertainment on the basis of joint participation. For example, receiving tickets to a Reggae Boyz football match would be considered a gift. However, an accountant attending a cricket match with a client, regardless of who purchased the tickets, would be deemed as entertainment.

BEWARE OF GREEKS BEARING GIFTS

It must be noted that gifts may be genuine and only given as acknowledgment of a job well done, but some gifts may be given with ulterior motives. Clients might need a favour which may be unethical and expect the accountant to turn a blind eye, embellish financial statements and reports or falsify records. The client may see the gift as… “One hand washes the other”. Simply put,…the gift is given as a bribe.

There is a line to divide whether a gift is a bribe in business transactions. Whether in appreciation for a job well done or a celebration of a traditional holiday, ample opportunities exist for accountants to receive gifts from clients.

While there are few accountants who don’t enjoy unwrapping presents, all professionals must be careful to ensure that acceptance of a gift doesn’t in any way impair their judgement or violate professional standards, which leads to corruption.

GREASY GIFTS – THE ROOT OF ALL EVIL

In 2016, Jamaica had a score of 39 out of 100 on Transparency International (TI): Corruption Perception Index (CPI), where zero means highly corrupt, and a score of 100 representing the state of being very clean. As professional accountants, we must be concerned with the negative effects of corruption on our socio-economic stability. The issue of palm ‘greasing’, for both white and blue collar, has become too prevalent in today’s society.

The 2017 People and Corruption: Latin America and the Caribbean Global Corruption report by Transparency International shows there are worrying trends in corruption across Latin America and Caribbean. The term “bribe” refers to those who said that they paid a bribe, gave a gift or did a favour for a public service. A total of 21 per cent of those in Jamaica engaged in this behaviour.

Corrupt Client (gift giver) + Unethical Accountant (gift recipient) = Corrupt Organisation = Corrupt Society = Failed State.

Therefore, reducing corruption is key for a fair and equitable society; and tackling corruption effectively can strengthen development efforts, promote human rights, reduce crime, and help eradicate poverty.

ACCEPT OR NOT

For accountants, knowing the rules related to accepting gifts can keep you and your clients out of hot water. Laws and guidance on what constitutes bribery ranges from country to country, culture to culture and company to company, but ACCA’s rules of professional conduct require that auditors are independent and that they are seen to be independent at all times.

The Institute of Chartered Accountants of Jamaica (ICAJ), the regulatory body of chartered accountants, states in its code of ethics that:

“Goods and services should not be accepted by members in public practice or their immediate family or persons closely connected to the member in public practice, except on business terms no more favourable than those generally available to others. Hospitality and gifts on a scale which is not commensurate with the normal courtesies of social life should not be accepted.”

As a rule of thumb, the difference between what constitutes a gift and what constitutes bribery hinges on several major issues. These include the nature of the gift and whether you continue to represent the client who has presented the gift.

If your work with a client has ended, then it is fair to say that a small gift given in gratitude is acceptable. The gift should be modest, it should not be money or a voucher, nor should the gift be such that it would bring your independence into question.

Any gift that is not modest or is of great value or is disproportionate to the work that has been done should be returned to the client with a note of thanks and a short explanation that you couldn’t accept such a gift.

If in doubt, it is always advisable to adopt a conservative, gradual and risk-averse approach in order to manage these relationships. Ignorance is no defence, so maintaining vigilance must be paramount.

In this festive season and throughout the coming year,…eat, drink, be merry, and if you fall in the percentile of the accountants who enjoy unwrapping gifts, please ensure that the gifts accepted from clients are on normal business terms, not ‘greased’, and do not bring your independence and integrity into question.

Happy holidays….Let’s continue the fight against corruption!

Audrey Malcolm, FCA, FCCA, is a partner/consultant for accounting and internal audit, GenCom Accounting & Business Solutions