Maggie McGhee, ACCA’s executive director – governance, explains why ethics and professionalism are hyper-relevant in these disruptive times.
In our April Covid-19 global survey: inside business, impacts and responses report, 53% of respondents said they’re experiencing pressures completing client services work, and 36% said they face an inability to meet reporting deadlines.
In our June sequel report, The Road to Recovery, the results showed a somewhat improving picture. Respondents from audit firms see more opportunities in business continuity and resilience, digital transformation and supply chain transformation. It is a particular opportunity for smaller practices.
The pandemic has specific implications for auditing firms, with the nature of the audit process needing engagement and direct interaction with the audited entity.
Although digital advances continue to influence how audits are conducted and how evidence is gathered, as well as aspects of the reporting process, for many firms the crisis is creating a systemic shock to normal client engagement activities.
This situation presents risks for auditors and the work they do, alongside the businesses they work with. In both reports, leaders working in public practice report an increased audit risk relating to valuation of assets, completeness of liabilities or going concern issues – jumping from 27% in April to 52% in June.
Doing the right thing and a reaffirmed purpose
For accountants and auditors, Covid-19 presents potential specific ethical and reputational risks. There is a risk as more businesses come under financial pressure that financial mismanagement comes to the fore in the weeks and months to come. Governments globally have rapidly provided interventions to support business and individual citizens. To support speed and agility, many of these programmes have required a relaxation of controls at the point of payment with an increased risk that funds may be used inappropriately. Given the urgent need to support large sections of society this relaxation of controls is understandable and necessary however it is critical that professional accountants draw on their ethical training to ensure that action is taken where this is identified.
This makes the purpose of the profession all the more acute in these challenging times – to act ethically, with integrity and in the public interest. It is a time to be reminded of the ACCA’s code of ethics and conduct in guiding judgement and behaviour:
- Integrity: being straightforward and honest in all professional and business relationships.
- Objectivity: not allowing bias, conflicts of interest or undue influence of others to override professional or business judgements.
- Professional competence and due care: to maintain professional knowledge and skill at a level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques, and act diligently and in accordance with applicable technical and professional standards.
- Confidentiality: 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’s a legal or professional right or duty to disclose, nor use the information for the personal advantage of the professional accountant or third parties.
- Professional behaviour: to comply with relevant laws and regulations and avoid any action that discredits the profession.
Ethical behaviour is critical. The professional duty on an accountant is more important than ever, and correctly flagging any concerns is part of this duty, conducted with due consideration of this behaviour. Confidentiality therefore does not mean silence.
It is vital to reaffirm that the accountancy profession today is as important in helping to safeguard the sustainability of organisations and broader society as it has always been. The profession is central to building and sustaining long-term value, whether financial, social, human, natural, manufactured or intellectual. Most importantly, the profession must remain trusted to do so.
Trust in audit and the wider profession comes from the three fundamentals of ethics, expertise and connectivity. While these features may not be unique to the profession, together they support our view that the profession is well placed to sustain organisational and societal value and reassert its purpose and value to safeguard its own future viability alongside the sustainability of organisations and broader society.