Enron and WorldCom have become the benchmark of what businesses should not do in the course of doing business. They are also example of the way things have been done by many business with a hazy approach of ethics.
Accountants are, by and large, an honest and hardworking lot, and accountancy is a by the book profession. Ethics is part of the extended role of the profession. There is a definite need to learn from the past, build positively on these experiences and continue to develop and follow best practices.
The accounting profession is characterised as being subject to many rules and regulations. Accountants are seen to be at the financial forefront and are expected to exhibit more professional ethics than anybody else as part of their professional responsibilities. Before, it may have been sufficient to report transparently, it has now become necessary to operationalise transparency on day-to-day basis. It’s tedious, but necessary. In the long term, it will build trust between accountants and other stakeholders.
What was a necessity 20 years ago is not sufficient today. Technology is changing the way business is done. Accountants, like everyone else, need to be tech-savvy. Business today is being transacted at a faster pace and in larger volumes than ever before. Technology helps business and the people who runs them keep up. But technology is only an enabler. It cannot replace the quintessential basics of accounting (or any profession, for that matter), and it is only good as the people who use it.
Ironically, the one element that has never change despite commercial and industrial dynamic is ethics. More specially, the application of ethics to business practise. Ethics and integrity will always come back to bite those who dared ignored them - more often than not, in the form of public opinion which influences various stake holders and ultimately affects the company values. Ethics and integrity are not college courses, unfortunately, they are subjects examined by public scrutiny.
Integrity enforces ethics. There need to be recognition of what is ethical and what is not. The line between personal and professional ethics is a very indistinct one. “Being ethical” is perhaps best described (by Socratic ideal) as ‘not the person who knows the right, or who chooses that right, but the person who does that right as a habit of living’. Ethics is the knowledge of what is right; integrity is the strength of will that keeps one operating within those parameters. There cannot be one without the other.
Complacency in any aspect of business is a death knell. Globalisation means the world is shrinking. Businesses need to be more transparent, that shareholders want better accountability; that if accountant stay fixated on self-regulation but only pay lip service to it, the authorities will step in and wield that big regulatory stick themselves, for the public good.
Accountancy has been about innovation over many years but has always tended to be stereotyped as stodgy and dull. With the call for more ethics among members of the profession, another aspect of the issue comes into play. Public expectation have increase but actual delivery services may not be in parallel. Inefficiencies are only now being flushed out.
Resources are limited and accountants are finding now that they have to go into areas where they have traditionally not gone before. They have to report on how money is being spent, but are encountering opposition because while they do have the authority to make the financial decision, they are not the ones who have to make the heed, sometimes life and death decisions. More will be expected of the accountants that just the ability to crunch numbers. They will have to exhibit both professional and personal integrity and willingness to comply with rules and regulations imposed by third parties on a profession that has been quintessentially self-regulating. They have to convince their stakeholders of their integrity, and that their every action complies with the amorphous standards of what is ethical.
The role of the accountants cannot be looked at in isolation of everything else in the world, with the accounting profession, you either follow the stringent criteria or you don’t. Accountants have a lot of compliance to put up with.
Things change, people change, environment change. The ones who survive and those who astute enough to grasp this, and versatile enough to effect that change.
Interview with Dennis Yates (ACCA President)
By Dato’ Raymond Liew and team