Keep ethics front and centre – always
17 August: Ethics underpins the work of Chartered Accountants, both in business and in practice. Keeping up to date with the latest ethical requirements is a vital part of CPD.
Chartered Accountants can lead the way on ethics in their organisations, and ICAEW equips members to do just that, says Sophie Wales, ICAEW’s Head of Ethics and Economic Crime.
At the beginning of the year, ICAEW issued an updated Code of Ethics, effective from 1 January 2020. “There are three main things for members to be aware of,” says Wales.
First, the Code has been restructured. Most of the underlying requirements are the same as in the previous version of the Code, so while the sections may look different, in reality, they are not. Second, ICAEW has added fresh material on specific topics, but the substance of the requirements remains the same. Lastly, there are new sections on non-compliance with laws and regulations (NOCLAR), of which all members must be aware.
Members should, at the very least, familiarise themselves with the new material. “There are new sections on conflicts of interest, breaches of the Code, inducements, and content for professional accountants in business, where requirements that were previously implicit have been made more explicit. There are also some new sections on NOCLAR, and these are more significant.
“The Code has, for many years, said that an accountant could, in certain circumstances, breach confidentiality if it is in the public interest to do so. However, the 2020 Code introduces a lot of new material on NOCLAR for members in business and practice to guide them through the steps they should take. ICAEW has made additional support material available in this area.”
And Wales reminds anyone conducting audits that the FRC ethical standard also changed in December 2019, with the new rules coming into force in March this year. It aims to strengthen auditor independence, prevent conflicts of interest and improve audit quality. Additional changes impacting the audits of Other Entities of Public Interest will take effect in December 2020.
“These are the things that Chartered Accountants need to be aware of to make sure they are compliant with their core CPD obligations,” says Wales.
More broadly, there are other issues members need to consider around CPD and ethics. Trainees and members overseeing training programmes may be aware that the Ethics Learning Programme for the ACA and BFP is broader than previously. A raft of scenarios – depicting situations where choices must be made that test ethical decision-making – have been incorporated into these qualifications to make the ethics programme more robust and fit for purpose. “These scenarios are an example of how ICAEW is making ethics more prominent in the qualification,” says Wales.
For members who have already qualified, ICAEW has developed a series of case studies for members in business that help them learn about challenging situations in the context of realistic scenarios, people and problems. These build upon case studies developed by the CCAB for both members in business and members in practice.
Other ethical considerations are bound to challenge the profession in the future but are, at present, somewhat nebulous. For example, our reliance on technology and remote working have prompted discussions about building and sustaining an ethical culture, points out Wales. As we have become more isolated at home during the pandemic, we are hoping ethical training has been sufficient to carry us through but trying to build a strong culture remotely is challenging.
We have also been talking about the role of professional judgement when making decisions concerning government emergency schemes during the pandemic. This scenario was not on the agenda previously but has been prominent in recent months.
So why is the spotlight on ethics when there is so much regulatory and knowledge-based learning to be done? “Increasingly, members are becoming aware that ethical judgements they make now might be called into question further down the line,” she says.
What, in particular, is likely to trip up members in their day to day work? Are we talking about the big issues that verge on financial crime, or is it something closer to home?
“The things that trip up members are often the grey areas,” says Wales. “For example, where a member gets caught in the middle of a client dispute when a business breaks-up, or a family issue such as divorce. It can be difficult to navigate these situations, especially where you have long-standing relationships with the parties involved.”
When faced with these ethical dilemmas and questions remain unresolved, members would do well to consult ICAEW’s ethical conflict resolution framework and work through that. If that does not resolve the issue, please call the Technical and Ethics Advisory Service helpline [+44 (0)1908 248 250 (Option 2) Monday-Friday].