New ethics code for accountants: action must be taken on threats straight away - expert

Accountants are now bound by a revised code of ethics to take action when they perceive a threat to their ethical standards, according to experts at the SAIPA Accounting Indaba on Tuesday.

SAIPA, the South African Institute of Professional Accountants, held its indaba – with the theme "The Future-Ready Professional Accountant in the 4th Industrial Revolution" – at the Cape Town International Convention Centre from 14 – 16 August.

Speaker Saadiya Adam, a technical advisor for the International Ethics Standards Board for Accountants (IESBA), said the ethics board's recently implemented revised code makes it clear that where a threat to ethical standards is perceived, action must be taken to bring the threat down to an acceptable level.

The IESBA is an independent standard-setting body for professional accountants worldwide.

"So, if a professional accountant evaluates that a threat is at an unacceptable level, he or she must use safeguards," said Adam. "This safeguard action could include declining to do the work in question."

Threats could include self-interest - for instance the promise of a lucrative "bonus" depending on the decision taken by the accountant; too much familiarity between the client and the accountant; and even intimidation by threatening the accountant's job.

The revised code also asks that an accountant takes a step back when evaluating a potential threat. To see if a threat is at an unacceptable level an accountant must look for additional information and also at the environment surrounding the issue, according to Adam.

Other speakers underlined the importance of ethical accounting.

Tax Ombud Judge Bernard Ngoepe noted that SA needs investor confidence and, therefore, "those tasked to look after our monies" must be held accountable and made to stick to ethics principles.

"I believe there are some problems which go beyond just the accounting profession. A lot of other professions - like the legal profession - have issues too. For instance, how can you write a three-page opinion for government and charge R3m?" asked Ngoepe.

He said it does not matter to him how big an accounting firm is, as long as every single individual in that institution is ethical.

"I sympathise with the accounting profession. To fix some of these things we may have to start creating the kinds of individuals we want much earlier. We need to start moulding (ethical) people earlier. You must factor in public interest too," he added.

Tax and corporate law specialist Ettiene Retief said many people rely on the audit industry and the information it produces.

"Some say the audit profession has gotten too much control and in Europe there is talk about breaking up the dominance of large international auditing firms," commented Retief during a panel discussion.

"I do not think that will fix it. It is not just about an audit function, but about an assurance function. I think in moving forward the industry should focus on the quality of the assurance it gives."

He emphasised that the integrity of the audit profession is also about its mindset towards questioning when something appears out of place or raises a concern.

"If it looks like a duck, it does not mean it is a duck - it must also quack like a duck," said Retief.

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