- The fundamental principles of the code – including objectivity, professional competence and due care – are led by integrity, the cornerstone of the profession.
- While most members observe this principle closely, a failure to do so can result in disciplinary consequences.
- Integrity breaches arise in a range of ways, such as intentional acts of deception, dishonesty and/or making misleading statements or documents.
Chartered accountants are bound by an internationally recognised code of ethics, and the designation conveys they are held accountable to high professional and ethical standards. The fundamental principles of the code – including objectivity, professional competence and due care – are led by integrity, the cornerstone of the profession.
While most members observe this principle closely, a failure to do so can result in disciplinary consequences. Rebecca Stickney and Kate Dixon, leaders of the Chartered Accountants Australia and New Zealand professional conduct teams in New Zealand and Australia respectively, discuss the kinds of lapses in integrity or honesty that occur on both sides of the Tasman, and the repercussions that may result.
Acting with integrity
Dixon says the code states that compliance with the principle of integrity requires a member to be straightforward and honest in all professional and business relationships. The code 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. Dixon notes that this last aspect is a new requirement, and recommends that members familiarise themselves with the recent updates to the code.
“There are also some critical rules prohibiting a member from knowingly being associated with information which the member believes contains a materially false or misleading statement, contains statements or information provided recklessly or which omits or obscures required information where such omission or obscurity would be misleading,” she says.
“Members need to think about the fundamental principle of integrity broadly, because failure to do so may also amount to a breach of the fundamental principle of professional behaviour as it could bring discredit.”
Stickney agrees that integrity fundamentally defines the standing of the profession in the eyes of the public. Even if certain behaviour isn’t specifically articulated in the code, members must comply with the spirit of it, she says.
“It’s respecting this important position and the privilege that you have by being able to call yourself a chartered accountant and conducting yourself throughout your professional life that behooves that standing.”
Stickney says integrity breaches arise in a range of ways, such as intentional acts of deception, dishonesty and/or making misleading statements or documents. However, the standard can also be breached through unintentional acts that arise through omission or recklessness.
She notes breaches can be motivated for a range of reasons, including self-interest or to advance the interests of others such as a client, employer, friend or family member.
Both Dixon and Stickney see cases where members have made misleading declarations or statements to New Zealand Institute of Chartered Accountants, CA ANZ and other regulatory bodies.
In New Zealand, a number of cases have included allegations of misleading information being provided by members in response to practice information questionnaires, as part of practice review and in annual member declarations. Breaches have included members responding deceptively about the types of services they provide, such as not disclosing they were undertaking assurance services or offering accounting services to the public.
Dixon says there have been cases in Australia where members have had professional registrations terminated for making false statements in the registration or annual renewal process.
Members need to carefully consider what is being asked of them when they are attesting to the accuracy of information because providing false information could amount to a breach of the fundamental principle of integrity. Members also need to be careful to ensure they are not providing information recklessly, as this can also amount to a failure to comply with the fundamental principle of integrity.
“If you’re not certain what you are being asked or what information you are providing, you may need to do quite a lot of due diligence to make sure it’s correct, because failure to do so could be considered reckless,” Dixon adds.
“If you’re not certain what you are being asked or what information you are providing, you may need to do quite a lot of due diligence to make sure it’s correct, because failure to do so could be considered reckless.”
Telling the truth
Some members intentionally set out to mislead either a client or CA ANZ. Dixon refers to one complaint where the member ultimately admitted that he had prepared a false document and then provided it to a client without making it clear that it was false. The member also failed to tell the Professional Conduct Committee about what he had done. The committee considered that, among other things, this amounted to a breach of the fundamental principle of integrity.
At times, members attempt to conceal professional negligence with false information. Stickney recalls a case in which a member was unable to lodge a client’s tax returns in time, due to the member being overcommitted.
“The member did not communicate that to the client and, in fact, told them their returns had been lodged and later falsified Inland Revenue records to support the misleading statement to the client,” she says.
“Had the member been upfront about it, the tax situation could have been resolved. There may have been penalties and interest to deal with and perhaps a complaint about untimeliness. However, the member was removed from membership because of the serious breaches of integrity.
“Had the member been upfront about it, the tax situation could have been resolved.”
“If members are not able to complete the work for a client, it is essential they communicate that, so the client can go elsewhere,” says Stickney.
She also urges members, when responding to CA ANZ questionnaires and mandatory notifications, to do so candidly.
“If there is something to declare in accordance with members’ disclosure obligations, the fact that they have done so is an important factor. Whereas a failure to do so, or providing false information, will aggravate the situation.”
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