Stealing from your employer or client is an obvious abuse of trust for an accountant and one that comes with severe repercussions. Fortunately, it is a rare event among CA ANZ members who are bound by the profession’s code of ethics. Nevertheless, it is an example of a breach of integrity that has come before the disciplinary bodies.

One of the core values of the accounting profession is acting with integrity in all dealings. Along with objectivity, professional competence and due care, and confidentiality, it is a fundamental principle of the code and is crucial in maintaining the credibility of the profession.

Despite this, integrity cases come before the disciplinary bodies each year in both Australia and New Zealand, either because of deliberate actions, or because members have committed a breach of integrity through omission or recklessness.

Kate Dixon, CA ANZ Australian conduct leader, says the code outlines that the principle of integrity requires a member to be straightforward and honest in all professional and business relationships.

“The code also sets out that it involves fair dealing, truthfulness and having the strength of character to act appropriately, even when facing pressure to do otherwise or when doing so might create potential adverse personal or organisational consequences,” she says.

While the majority of CA ANZ members act with integrity, Dixon says breaches sometimes arise, including through fraudulent behavior, creating false documents, cheating on exams, stealing client funds, and lying, among other things.

Crossing the line

Rebecca Stickney, CA ANZ New Zealand conduct leader, says accountants are put in a significant position of trust when it relates to people’s finances, however, this trust can be abused.

“The most serious matters we see involve dishonesty of some kind, such as where funds are misappropriated,” she says. “Thankfully, that's the minority of our cases, but they also are the kinds of behaviors that can do the most damage to people’s faith and trust in the profession.”

Fraud cases arise in different ways, says Stickney.

“Some cases involve theft of client or employer funds either directly from their accounts, double invoicing, or theft of tax refunds, for example. In other cases, members have misused corporate credit cards or charged personal expenses to their employer. Some have also amended the coding of unauthorized transactions in the employer or client’s accounting software or records to obscure improper payments.”

Integrity issues do not always involve stealing. Some complaints involve a lack of fair dealing or truthfulness. Sometimes complaints arise where members have favored their own interests ahead of their clients or not been sufficiently upfront with clients. This issue has arisen particularly when members or their family do deals or joint ventures with clients outside of the core client–practitioner relationship.

“It is really important when considering entering a transaction with a client or employer outside of the normal business relationship to consider safeguards that will protect against being put in a position where you could be accused of an integrity breach,” says Stickney.

“Safeguards could include insisting on independent legal advice for all parties and ensuring that proper contracts documenting the terms of the agreement or venture with appropriate dispute resolution clauses are prepared,” she adds. “Other safeguards could include considering if you should continue as the accounting adviser or putting in place extra steps for dealing with client monies, including consideration of whether using a neutral business or solicitor’s trust account is preferable. Keeping good records of your actions, decisions, and any disputes is also important.”

What’s the motivation?

The reasons for integrity breaches can vary. Dixon says it may be deliberate, but there are also cases where the breach is not for personal gain, but due to a member’s misguided sense they are helping their client.

“We've had members preparing misleading financial statements for clients to help them get a loan,” says Stickney. “They have withheld certain information and colluded with their clients and it has not been done for personal gain, but rather from a position of misguided humanity.”

Dixon cites another example where an issue was identified through a complaints investigation and the member tried to obscure it.

“We had a case that went to our tribunal last year where the member had taken tax refunds as payment of fees without authority,” she says. “That in itself was a breach, but then the member told our Professional Conduct Committee that the client had provided the appropriate authority and that there were file notes and diary entries which recorded that authority, but then never produced them.”

Other examples may be driven by gambling addictions, personal financial pressures, lying to cover a mistake or because of other personal issues.

“Pinpointing the motivation is hard, but how you deal with mistakes or a complaint is the true test of your character and your ethics,” says Dixon.

Even if an accountant makes a mistake or faces a complaint that calls into question their integrity, Stickney says they can still respond with dignity and work towards restoring their ethics.

“Facing up to the problem is the first step,” she says. “This can be really hard and in really serious cases, members should also consider taking some legal advice. What the disciplinary bodies will be looking for is whether the member takes responsibility for their actions, the chances of rehabilitation, or if there is an ongoing risk to the public or the profession.”

Dixon adds, “There may be cases where people feel pressure because of their own circumstances or from clients, employers, or family members, but the code provides quite a detailed description of what you should do and it should be your guide, if in doubt.

“If you’re facing an ethical dilemma, you can also contact CA ANZ for guidance.”