Ethics

The Professional Accountant’s Mindset and Tackling Corruption

Tanya Barman  | 

Over two-thirds (69%) of the 176 countries rated on the Transparency International’s Corruption Perceptions Index 2016 scored below 50 out of 100 (0 is perceived to be extremely corrupt and 100 is perceived to be completely clean).

Clearly, there is some way to go then in tackling global corruption.

Earlier this year, IFAC positioned the positive role of the accountancy profession in tackling corruption, identifying three vital areas of action: collaborative efforts across all sectors, transparent and accountable public financial management and, to support the public interest, greater public adoption of high-quality international standards on financial reporting auditing and ethics.

Ethics is core to the accountancy profession. It is widely recognized that in recent years there has been an increased focus on business ethics, driven in part by the many high-profile business scandals that have caught global attention. Incidents of fraud and corruption can impact organizations of every size and every sector globally. No finance professional can be complacent about the risk of either wrongdoing taking place somewhere within their organization, or being targeted by external fraudsters, and need to be alert to apply their code of ethics. For professional accountants who have a duty to uphold integrity and objectivity, through their commitment to their code of ethics, there is a clear requirement to not knowingly misrepresent facts or subordinate their judgement to others and to be straightforward and honest in all professional and business relationships.

Management accountants, with their training in analyzing and interpreting both financial and non-financial data, are in a position to challenge information that seems suspicious, and to be diligent in examining the supply chain, as well as interpreting where there most likely is high risk—be it in a market, product line or through partners or suppliers. They also have an important role to play in influencing the organization to have the right systems in place, contributing to the ethical organizational culture and escalating identified issues promptly for resolution—all of which safeguard the organization. The recently introduced NOCLAR standard (Responding to Non-Compliance with Laws and Regulations) from the International Ethics Standards Board for Accountants offers further guidance in both addressing and escalating such issues. Professional accountancy organizations globally are taking steps to incorporate the standard into their Codes of ethics.

Fighting fraud and corruption continues to be a focus for G7 and G20 meetings as bribery and corruption are recognized as an impediment to economic growth. This was a theme prioritized by the 2016 London Anti-Corruption Summit, which brought together a group of world leaders from 43 countries who made a total of 648 anti-corruption pledges. In the last few years there has also been an increasing volume of legislative action and this momentum is set to build. For example, 2016 saw the biggest enforcement year in Foreign Corrupt Practices Act history with 27 companies paying approx. US$2.48 billion to resolve cases. 2016 also saw a focus on cases against individual executives and foreign officials.

Recent CGMA guidance on countering fraud and corruption, together with an overview by Transparency International on current trends and their 2016 global perceptions index, highlights the role of the accountancy profession.

Overarching questions for those charged with oversight should include:

  • What is the top-level commitment to fighting fraud and corruption and what resources do we have to support this?
  • How are anti-fraud and anti-corruption processes ingrained in our control processes? Are they proportionate to our risks, circumstances and culture?
  • Are feedback or reporting mechanisms in place, known about, trusted and used?
  • What plans are in place to investigate wrongdoing when it arises, and are we consistent in our actions?
  • How are we monitoring the implementation and effectiveness of our anti-corruption programs and how does this feed back into improvements?

As Transparency International comments: Ultimately, accounting professionals can play a vital role in tackling corrupt behavior. A curious, questioning mindset will uncover anomalies and wrongdoing, and will help convey the message throughout the organization that bribery and corruption will always be exposed.

 

Tanya Barman

Associate Director, Ethics, Chartered Institute of Management Accountants

Tanya Barman works as Associate Director, Ethics for CIMA, and as part of the Management Accounting unit of the Association of International Certified Professional Accountants – the partnership between AICPA and CIMA.  She contributes to the Association’s responsible business and related outreach programme for CGMAs and students globally.  Previously she worked for International Business Leaders Forum (IBLF) a not-for-profit global organisation working with business leaders to deliver innovative solutions to sustainable development challenges with a focus on issues of governance, anti-corruption and human rights. Prior roles have included organisation development, advocacy and management positions in both commercial and non-profit organisations in UK, USA, South Africa and in Asia.  She is CIPD qualified and has an academic background in International Relations and Development.