All accountants have to adhere to the five fundamental principles of ethics for professional accountants – but can you name them? Do you adhere to them? Have you ever come under pressure to act unethically?
CIPFA’s evidence has shown that at some point in their career the majority of accountants will come under some form of ethical pressure. A changed political and financial culture means that professionals are more in ‘the line of fire’ than ever before. Professionals can be useful scapegoats for politicians when things go wrong.
The five principles are of course integrity; objectivity; professional competence and due care; confidentiality; and professional behaviour. A new edition of the International Ethical Standards Board of Accountants Code was released in April 2018. The new Code reinforces these fundamental principles. This most recent update of the Code which has been approved for adoption with effect from 1 November 2018 by Council, and will become CIPFA’s Standard of Professional Practice on Ethics (SOPP on Ethics).
This means that CIPFA is the first professional accountancy body in the UK to adopt the new code. CIPFA will demonstrate its leadership and support to members by also publishing revised materials and a suite of ethical case studies. The case studies were gathered over two days from finance professionals at CIPFA’s annual conference.
The SOPP on Ethics itself applies to all CIPFA members (including affiliates, associates and members) and registered students. The SOPP is based on the International Ethics Standards Board of Accountants Code of Ethics (the IESBA Code), which CIPFA adopts in full.
In preparing to support members, CIPFA conducted a survey which was open to all public sector accountants. The results were revealing. Of the respondents, nearly 90% were qualified and working in the public sector and three quarters of them were CIPFA members.
More than half of respondents (57%) told CIPFA that they had come under pressure to act in a professionally unethical way during their career. Some of those pressures included, distorting information, being overly optimistic or downplaying risk.
Of those who felt under pressure to act unethically, many said that they felt under threat. These threats took various forms, including being passed over for promotion, aggressive or unpleasant behaviour, implied threats of redundancy and being made to feel their job was at risk. It was found that the consequences were real. The survey found that some had resigned and had their post made redundant, while a number found themselves subject to a disciplinary process.
The survey results and the new Code are something of a landmark and will help CIPFA shape its ongoing support for members. For members it’s not enough just to be able to know the principles, professional accountants should be prepared to live them. This means being familiar with the potential threats and the safeguards we can implement to address them.
So from November, CIPFA accountants will lead the way in adhering to the highest global ethical standards. The new suite of materials from CIPFA will help CIPFA’s finance professionals to maintain and live their ethical principles.