How to react to an unethical request
How should young CAs respond when facing pressure to do something unethical or illegal?
- Being asked to do something unethical or illegal is a great personal and professional challenge for young CAs.
- One wrong move can end a career, land a whistleblower in court, or lead to bankruptcy.
- If asked to do something questionable, think carefully, document everything, and seek good independent advice.
One of the most difficult challenges young CAs can face is being pressured into doing, or into ignoring, something unethical or illegal.
Pressure may come from a CEO wanting to falsify accounts or a supplier offering a bribe. It could be a customer proposing a hidden commission or an internal request not to disclose a negative event or report the wrongdoing of a colleague.
Young CAs, who can often have a young family and large mortgage, are particularly vulnerable. One wrong move can end a career, land a whistleblower in court, or lead to bankruptcy. In Australia (ranked 13th on Transparency International’s 2016 CorruptionPerceptions Index) where scandals are common and there is no effective whistleblower protection or reward, things can be tough.
CAs are not alone in facing corruption. Lawyers, doctors, engineers and pilots can also face similar issues. There are some key questions for CAs.
- What are my obligations?
- What career damage might I face?
- Who can I can turn to?
- How can I get out of this?
Just like the pilot whose aircraft engine fails, the CA’s first thought will likely be, “This can’t be happening to me”. This is exactly how a young CA, whose name is withheld from this column, felt when resisting pressure by a CEO to falsify the accounts and board reports for a listed entity.
“Everyone I turned to for help – directors, auditors and legal advisers – promised to help, but in the end, did nothing,” says the young CA. “I had to resign. Later the company went broke owing NZ$150m.”
“The directors and auditors ended up either in jail or settling for large sums out of court. It cost me, as the victim, a lot – financially, personally – and it took years to re-establish my career afterwards.”
This experience is not unusual, and one option is to immediately walk away without saying a thing and leave the problem for someone else to solve. To do otherwise they may have to risk everything.
How to respond
If walking away is not an option, then the first action may be for the CA to tell the person applying the pressure that they will not do, or hide, anything dishonest.
“I recommend the introductory words, ‘In the best interest of the organisation...’,” says Dr Kerry Bennett, CEO of Graduate House of Melbourne University, who mentors young professionals.
An experienced CA, who has worked in Asia and was often tested, recommends responding with, “I know what you’re asking, but I just can’t do that”.
Being asked to do or hide something unethical or illegal is a great personal and professional challenge for young CAs.
Another option is to raise the matter with the chair of the organisation. Unfortunately, recent history of such actions in Australia has resulted in support for the higher manager and trouble for the junior employee.
Support from CA ANZ
Seeking independent legal advice so that the CA knows where they stand is a good idea, but it can be expensive. Often the advice will be to document everything as insurance. Speaking with the audit partner is another option.
Some CAs will confide in a third party. Chartered Accountants Australia and New Zealand (CA ANZ) offers help when CAs are faced with a professional challenge. But even this requires care and can have serious consequences, such as potentially leading to accusations of breaching confidentiality clauses in employment agreements.
Australian CAs (similar provisions exist for New Zealand CAs) should have reference to GN 40 Ethical Conflicts In The Workplace– Considerations For Members In Business, which has much useful guidance, and at Part 4.3 it states:
“If, after exhausting all relevant possibilities, the ethical issue remains unresolved, the member should, where possible, refuse to remain associated with the matter creating the conflict. The member should determine whether, in the circumstances, it is appropriate to refuse to perform the duties in question or be associated with information the member knows is misleading, or whether it is appropriate to resign altogether from the employing organisation”.
Being asked to do or hide something unethical or illegal is a great personal and professional challenge for young CAs. Think carefully, document everything, and take good independent advice.
This article is part of an ongoing Careers column offering tips and advice for provisional members of CA ANZ and younger full members. For more information on the Chartered Accountants Program, as well as inspiring stories of young chartered accountants visit youunlimitedanz.com now.