Taking the long view on ethics in accountancy

Today/Wednesday (18 October) is Global Ethics Day, an annual opportunity to reflect on the ethical principles that underline our work as Chartered Accountants.

This year it takes as its theme ‘Ethics Empowered’ – using the power of ethics to build a better world. It’s a theme which strongly resonates with me on many levels.

Here at ICAEW, we will explore what this means for business leaders at our first ethics day roundtable, bringing together people from different sectors and professions to debate and discuss what is undoubtedly a difficult and often challenging topic personally and professionally. As Chartered Accountants, we have a clear requirement to maintain our professional development on an annual basis, and from 1 November 2023, this will be reinforced by ICAEW’s new mandatory ethics CPD requirement. As a profession, we also have a duty to positively promote an ethical culture in our organisations.

A code of ethics gives accountants a detailed set of requirements which professionals in business and practice must follow when they encounter instances of non-compliance with laws and regulations. For example, as part of the requirement to act in the public interest, and in accordance with the principles of integrity and professional behaviour, accountants have a key role to play in combatting economic crime. In our world, ethics is an ongoing professional duty where the rules of engagement are clearly set out.

But don’t just take my word for it. The Edelman Trust Barometer 2023, which is published on Wednesday (18 Oct), found that trust in Chartered Accountants is on a general upward trend in all countries since 2018, particularly in England which saw a 17-point increase.

The report found that the ‘… themes of transparency and misinformation are becoming ever-more important for driving trust, and while they are often spoken about in a political realm, they remain of upmost importance to business…’, and this is a perspective with which I agree.

Meanwhile, the research also highlights the fear and anxiety that have been fueled by economic uncertainty and the cost-of-living crisis. It is accountants’ role to provide advice, support and help to alleviate these difficulties.

Like most things in life, however, nothing is black and white.

On a human level, we know that none of us is perfect. There have been many well-documented incidents where failures, ethical or otherwise, have come to the forefront of people’s conduct in business.

The questions surrounding ethical standards, and what they mean to different people in different circumstances, remain complex.

In considering why good people sometimes do bad things, ethical blindness – the inability to see the ethical aspects of a decision in some situations – has been shown on multiple occasions to have been a very real factor in many recent business scandals. For example, when it was discovered that VW had falsified vehicle emissions, in the so-called Dieselgate scandal, management failed to respond ethically to the problem they faced, despite understanding the significance of their findings. This lack of oversight led to nearly $10 billion being paid to American car owners, as well as a significant dent to VW’s reputation over several years.

Meanwhile FTX co-founder Sam Bankman-Fried is currently on trial for alleged fraud. He has been accused of an £8bn financial fraud, including concealment and building a business based on lies, despite him professing to be an advocate of effective altruism.

Empowering our ethics enables us to use culture and values as a force for good. It’s incumbent on all of us to put this into practice.

The way in which we interact with our colleagues is important not only for a company’s culture but how we work to retain our employees in the long run. Short-termism has no place at this table; there is a need to commit to an ethical culture over many decades and keep this top of our business and leadership agenda.

Establishing a culture which allows people to speak up and be empowered to express their views is vitally important. It is not just about having the right systems and controls in place, for example, by having the right opportunity to blow the whistle if the need arises, but to allow them to thrive in the workplace.

My personal passion is the drive towards net zero and working to influence how we set out a transition plan not only within ICAEW, but across business more widely as the issue defines our personal and professional landscapes. As we see across a variety of projects and business issues, we must take an ethical stance for the long-term future of our planet, not only to protect generations to come but to guide them and us in our ever increasing complex and difficult world. It is only then that we will truly be able to say that we have used our ethical stance to build a better and brighter world.