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Ragiema Thokan-Mahomed, legal, ethics and compliance executive at the South African Institute of Professional Accountants (SAIPA), explains why a loss of ethics risks a public backlash.
The massive public opinion backlash experienced by politically implicated persons in the accounting profession, demonstrates the risk of reputational damage when the fundamental principles guiding professionals in the accounting sector fall by the wayside.
These fundamental principles of the Code of Professional Conduct and Ethical Behaviour include integrity, professional behaviour, due care and competence and objectivity.
When these fundamental principles are violated through the conduct of professional accountants, then questions are raised about the value and quality of the work they have performed.

The test for independence
Objectivity requires a critical independent mind by professional accountants when carrying out their duties and responsibilities. In the realm of professional accountants, the highest form of assurance is “audit assurance” to the users who rely on the information presented in the financial statements.
It is for this reason that their conduct should be beyond reproach. If there is any form of bias when performing the functions as a professional accountant, that cannot be reduced or eliminated, then objectivity dies.
The major threats to independence include self-interest, self-review (being the player and the referee), advocacy, familiarity and intimidation. Even if there is the slightest perception of a threat to independence whether in the form of a conflict of interest or if the line between familiarity and professional behaviour becomes blurred, professional accountants must apply professional judgement to determine impact on the work performed.

Emphasis for ethical behaviour
The Code of Ethics for professional accountants established the IESBA (International Ethics Standards Board for Accountants) offers guidance when dealing with threats and safeguards to prevent any breach of the fundamental principles. In terms of the “Conceptual Framework Approach” or better described in rugby terms: touch, pause and engage; the threat of any ethical dilemma has to be identified, evaluated in terms of its severity and then it requires the use of whatever safeguards necessary to reduce or eliminate the threat.
Any debacle in the accounting profession raises the question of ethical behaviour and the responsibility of the professional accountant to maintain the balance between serving the public interest and that of their client.
The International Federation of Accountants (IFAC) accredited Professional Accounting Organisations (PAO) are pro-active in its approach to any matter that may bring their Institutes into disrepute as a result of the conduct of their members.
Random checks and balances are conducted on members to ensure that they remain in “good standing” and we encourage the public to lay a complaint for investigation should they experience misconduct or unprofessional behaviour from our members.

Role and responsibilities of professional accountants
Once accountants become aware of the irregularity they have to report it to a direct superior, and if they are the most senior person they have to consult with the board of directors or anybody who is involved in corporate governance in the organization.
The responsible people must be allowed time to rectify, remediate or mitigate the consequences of the identified or suspected non-compliance.
IFAC accredited PAO’s advise their members to follow the internal route first. If they feel there is insufficient action to rectify the non-compliance, they can approach the regional forums and professional bodies. If there still remains unease they should consult legal counsel.
The code acknowledges that a senior professional accountant is expected to apply their knowledge, professional judgment and expertise when dealing with matters, as they are in a unique position to influence the ethical culture of the organizations they serve.

Dealing with threats and intimidation
The Code of Ethics states that where it is not possible to reduce the threat to an acceptable level, a professional accountant in business shall refuse to remain associated with information that is considered misleading.
It is critical for the professional accountant to meticulously document what he has done to address the non-compliance. This will act as proof that he adhered to the requirements and responsibilities set out in the new section of the code.
It is advisable to document the nature of the matter, the results of discussions with a superior, management and, where applicable, those charged with governance and other parties. It is important to document the response of the accountant’s superior, the courses of action the professional accountant considered, the judgments made and the decisions that were taken.