Letter from a Professional Part 2: What are professional ethics?October 26, 2013
This is the second post in which a friend of mine who is an accountant talks about what a profession is. I will respond to the points raised and their relevance to teaching in a subsequent post.
The ICAEW defines integrity as “to be straightforward and honest in all professional and business relationships”; i.e. don’t lie. This relates to the public interest aspect of professions. If the members of a professional body cannot be trusted to deal honestly in their business relationships then any work they produce cannot be relied upon by the public,
The ICAEW defines objectivity as “to not allow bias, conflict of interest or undue influence of others to override professional or business judgements.” One of the key concepts associated with objectivity is independence. It is not enough to be independent, a professional must not do anything which can construed as compromising their independence. The test is typically, if an informed third party were aware of this situation would they consider the professional independent.
Another key concept here is professional scepticism. From the ICAEW website “professional scepticism is an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence.” Moving away from the specifics of audit, this means not assuming information provided is always accurate and not being trusting of individuals that a professional deals with and the information they provide.
Professional competence and due care
The ICAEW defines this as “to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services based on current developments in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standard.” Part of this involves undertaking continual professional development. As a professional, there is a duty to ensure that you are up to date with the relevant facts in your profession and able to undertake your work correctly.
The ICAEW defines confidentiality as “to respect the confidentiality of information acquired as a result of professional and business relationships and, therefore, not disclose any such information to third parties without proper and specific authority unless there is a legal or professional right or duty to disclose nor use the information for the personal advantage of the professional accountant or third parties.” The duty of confidentiality allows companies to provide sensitive information on the understanding that the professional will not disclose it to any individual unless required by law to do so or with the company’s permission.
A rather unusual example here, is that if an individual or company were found not to be disclosing tax to HMRC, than an accountant is required to resign but cannot tell HMRC the reasons. They still have a duty of confidentiality in relation to the individual / company concerned as there is no legal duty to disclose the information to HMRC.
The ICAEW defines this as “to comply with relevant laws and regulations and avoid any action that discredits the profession.” This is a very straightforward concept although “discrediting the profession” is not the most clearly defined concept. For example, someone drink driving would count but having an affair would not.
This is defined as “the threat that a financial or other interest will inappropriately influence the professional accountant’s judgement or behaviour.” This translates as stating you can’t benefit from your professional work. For example, an accountant could not receive a fee for auditing accounts which was only paid if he agreed with the company.
This is defined by the ICAEW as “the threat that a professional accountant will not appropriately evaluate the results of a previous judgement made or service performed, on which the accountant will rely when forming a judgement as part of providing a current service.” Essentially, you can’t review your own work as you are unlikely to own up to errors.
This is defined by the ICAEW as “the threat that a professional accountant will promote a client’s or employer’s position to the point that the professional accountant’s objectivity is compromised”. This has been derived from the legal sense of advocacy but applies more widely. A professional should not endorse the opinion of his employer or client if they know it is incorrect or be seen to be doing so.
This is defined as “the threat that due to a long or close relationship with a client or employer, a professional accountant will be too sympathetic to their interests or too accepting of their work.” Personal relationships are not meant to influence a professional’s opinion. For example, audit partners are required to be removed from an audit every ten years to guard against this risk.
The last of the threats is defined as “the threat that a professional accountant will be deterred from acting objectively because of actual or perceived pressures.” This is quite a clear concept and turns up more often than would be expected within a professional context. I have seen this take place a number of times in my professional career with companies threatening to leave as clients unless they get the opinion they want.
In 2010, the UK Government brought the Bribery Act into law. It created four new offences:
- paying a bribe
- receiving a bribe
- bribing a foreign government official
- corporate offence of failing to prevent bribery
A bribe is defined as a “financial advantage” and may include corporate hospitality (if excessive) and facilitation payments. The defence for companies involves having in place “adequate procedures” to prevent bribery. This has lead to companies introducing detailed codes of conduct and ensuring that staff are adequately trained. The concept of excessive corporate hospitality is a grey area but as an example HMRC tax inspectors will typically avoid have lunch bought for them and will often avoid eating biscuits during meetings due to the negative perception.