How accountants can survive the public trust crisis
Levels of trust have crashed, but accountants can play a big role in healing public faith in business and the finance sector.
- Despite plummeting public trust in the financial sector, accountants were the fifth most trusted profession in the 2018 CA ANZ Trust Survey, with 75% of respondents seeing them as trustworthy.
- CA ANZ President Stephen Walker FCA says embracing the standards and ethics that underpin being a chartered accountant is critical if the profession is to successfully bridge the trust gap.
- Putting the customer first, and shifting an organisation’s mindset from the legalistic ‘can we do this?’ to the more ethical ‘should we do this?’, helps build trust and ultimately protects shareholder value.
Story by Sally Rose and Nina Hendy
The business community generally, and the financial services sector especially, is in the grip of a worldwide trust crisis. But while accountants remain relatively unscathed – at least compared with lawyers, bankers and politicians – that is no excuse for complacency.
Wholeheartedly embracing the commitment to standards and ethics that underpin being a chartered accountant will be critical if the profession is to successfully bridge the trust gap. That is one of the key findings in The Future of Trust: New Technology Meets Old Values report by Chartered Accountants Australia and New Zealand, released in March 2019.
The report is based on global research and also draws on the 2018 CA ANZ Trust Survey, which examined public perceptions regarding the trustworthiness of accountants. The survey was conducted for CA ANZ by global market research firm Dynata, and asked people to rate their trust in 16 different professions/sectors.
Accountants were the fifth most trusted profession on the list, with 75% of respondents seeing them as trustworthy.
“Accountants were the fifth most trusted profession on the list, with 75% of respondents seeing them as trustworthy.”
Medical doctors were the most highly trusted group on the list, with a rating of 90%. Engineers, teachers and the police also scored a higher trust rating than accountants. However, accountants were more trusted than lawyers, banks, technology companies, government and directors.
Building trust by putting ethics first
In his introduction to the report, CA ANZ President Stephen Walker FCA throws down a challenge to chartered accountants to build trust by putting ethics at the heart of all their decisions.
“The starting point for our personal, professional and organisational decision-making must be ‘let’s do the right thing’,” Walker says.
He stresses that finance professionals need to shift their mindset around the framework for business decisions from the legalistic approach of ‘can we do this?’ to the more ethical question of ‘should we do this?’
“A failure to stop and ask that basic question – ‘I may have the right to do this, but is it the right thing to do?’ – underpins many of today’s crises of trust and falling faith in authorities and institutions,” Walker says.
Kenneth Weldin CA, an audit partner based in PKF’s Melbourne office, says this issue should be front of mind following the findings of Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, led by Kenneth Hayne AC QC.
“After the Royal Bank of Scotland collapsed in 2008, following its aggressive takeover of ABN Amro, one of the directors reflected that having been so focused on the challenge of ‘can we do this?’, the board had never really stopped and asked ‘should we do this?’,” says Weldin. “Now here we are a decade later and I think the Hayne report shows pretty clearly that, despite the global financial crisis, that lesson is still to be learned.”
Weldin – who leads PKF’s internal audit, risk and governance practices as well as sitting on the firm’s global risk advisory committee – says accountants are ideally placed to provide a voice of reason with the organisations they work for or advise.
“Ethical business practices have never been more important. Everyone has a role to play in that, but especially accountants,” he says. “CAs are involved in, or should be involved in, all key decisions made in organisations whether big, small, public or private.”
He urges CAs to think of themselves as the “governance gatekeepers” or “ethics intermediaries” within their organisations.
The ethics litmus test: put customers first
Weldin notes that many of the recommendations made in the banking royal commission’s final report are not specific to banking or financial services.
“A lot of it boils down to classic decision theory – risk and control issues,” he says. “So people from all sorts of industries can learn from it.”
One of the most important mindshifts that needs to be made within organisations is to become more truly customer-centric.
“We used to talk about a litmus test for good ethics as being to ask ourselves if we would be proud to go home and tell our family what we’d done at work. Today, we need to update that and think about how a customer would feel about the decisions we are making,” Weldin says.
“Ethical business practices have never been more important. Everyone has a role to play in that, but especially accountants.”
“When you think about the ’fee for no service’ scandals that were exposed in the banking royal commission, it is just impossible to think anyone would have believed that had a customer been sitting in the room when the decision was made to charge those fees that they would have been comfortable with it.”
A Code of Ethics and competency help build trust
When the CA ANZ Trust Survey asked whether accountants could be trusted to provide unbiased advice, the profession recorded a trust score of 61%, signifying there is room for improvement.
University of Technology Sydney psychologist and ethicist Rosemary Sainty believes the accounting profession is at risk of “guilt by association” after the GFC, global finance scandals and now Australia’s banking royal commission. But she also notes that CAs are set apart by rigorous educational standards and a requirement to adhere to a Code of Ethics.
Encouragingly, trust in the accounting profession was highest among survey respondents who actually knew an accountant, and higher still among those who had regular face-to-face contact.
When survey participants were asked to nominate the qualities most likely to increase their trust in accountants, not surprisingly the two most common answers were that they be honest and that they be ethical.
Also interesting was the third most nominated quality for accountants to earn trust – protecting private data.
Trust is a global corporate challenge
Accounting firms must make building trust a key component of their corporate strategy, says KPMG’s global head of technology and knowledge, Christian Rast.
“In times of rapid change, we need to think of trust as part of a strategy that can massively impact on shareholder value in the future,” Rast says, and points out that KPMG’s bold profitability targets can be met only if it’s trusted by the public.
“We need to think of trust as part of a strategy that can massively impact on shareholder value in the future.”
“We’re absolutely certain we cannot grow our business without being a reliable and trusted partner to our people and our clients,” he says. “For us, trust is a fundamental of the business that gives us permission to grow. A corporate culture that promotes ethical standards and personal integrity paired with investments in high-quality technology was something expressed very clearly in our new strategy.”
The need for accountants to rise to the challenge of bridging the trust gap is a global one. In its strategic plan for 2019-20, the International Federation of Accountants (IFAC) states: “There is an urgent need and a real opportunity for the accountancy profession to speak into the public conversation about rebuilding trust, with an authority built on decades of acting in the public interest and advocating for transparency and accountability.”
As CA ANZ President Walker says, at its heart, building or rebuilding trust is about our personal choices. “That starts at the top in our boardrooms and senior leadership teams. Then it must be lived throughout organisations.”
12 qualities that safeguard trust
Competency: Others can be confident you have the skills and experience to fulfil your part of the contract.
Integrity: Others believe that you are honest and will keep your word.
Goodwill: Others have confidence you will look after their interests.
Accountability: Prompt and effective communication is crucial. A simple call or email to communicate matters to clients can go a long way towards improving trust.
Consistency: Look for ways to improve consistency around the services you offer.
Honesty: Unsurprisingly, survey participants said the most important quality affecting how much they trusted their accountant was honesty.
Data literacy: Protect private data held by your business and share a clear policy.
Transparency: Be clear about where you sit on certain issues and behave ethically at all times.
Quality: Make sure you provide a high-quality service and offer value for money.
Caring: Demonstrate that society or customers are above all else to your business.
Humanity: It’s important to maintain relationships with clients that extend beyond technology.
Openness to change: Look for ways to do things better and embrace change within your business.
Source: The Future of Trust: New Technology Meets Old Values