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Edition 378 – Questionable Ethics

Written by Dean Robinson.

At the moment, one of the big four accounting, audit and consulting firms is in the news for all the wrong reasons. One could argue the firm’s modern trading name might stand for:

Professionals
Without a
Conscience

One of the tax partners was engaged by the Australian Treasury to consult on some proposed legislation regarding multinational tax affairs. Except, the individual used their professional relationship with one of their clients to:

  1. Disadvantage that client;
  2. Advantage a bunch of other clients;
  3. Potentially, impact the fiscal position of the country.

Earlier this year, one of the statutory authorities the individual was registered with, removed their license to practice, suspending it for two years. The professional membership bodies the individual was a member of are yet to either conduct an investigation into whether professional ethics have been breached, or hand down their findings.

Last year, another of the big four was exposed for the culture of cheating on accounting exams that was rife amongst its graduate cohort. The professional bodies did review those actions and, very, very disappointingly, the penalties imposed on the individuals, and the firm, were little more than a tap on the wrist, let alone a wrap over the knuckles.

As a CPA of 31 years standing, and as someone who has signed up for a Code of Professional Conduct throughout my entire professional career, I’m simply disgusted the big firms have enabled this behaviour to take place. They’ve tarnished the reputation of thousands of good people as a result of their greed – nothing more, nothing less.

When something is wrong, it’s not right to sweep it under the carpet. If you see something and do nothing, you are as complicit as if you did it yourself.

Over the 30 plus years of my career, I’ve had to make a number of calls about what I saw and whether I wanted to maintain a relationship. Like the time, very early in my career, when a lady of, how shall we say, dubious morals, suggested there were non-financial ways to settle an outstanding account. Or the large client, where I disagreed vehemently with the director as to the under-reporting of certain expenses in the business, thus understating the true financial position. I wasn’t prepared to stake the reputation of myself and our firm, nor risk the employment of the 20 plus staff we had on the payroll at that stage, simply by turning a blind eye to such actions. I terminated the arrangement, which involved the loss of a substantial amount of fees. However, what’s your name worth if you’ve traded your reputation for money?

In my opinion, three things needs to happen:

  1. The professional bodies need to adopt a much tougher stance towards enforcing their Code of Professional Conduct. The actions of a few tarnish the good work and reputations of many, which is only exacerbated if those professional bodies refuse to go into full bazooka mode.
  2. The employees of the larger organisations that have been exposed as a result of these scandals should be enforced to undertake a mandatory Ethics course, prepared and delivered by experts in the field of ethics, not in-house.
  3. Significant financial penalties, and membership restrictions, should be imposed on any individual caught out in these circumstances. Sadly, unless it hits the hip pocket, some of this behaviour not only won’t go away, it will become ingrained in the individuals and the organisations.

THIS WEEK’S TIP

*”If it looks wrong and smells wrong, it is wrong.”