Thought Leadership
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Abstract
18 October 2016 What does being a professional mean? This was a question I raised a few years ago during a talk with university students interested in pursuing professional careers. While they understood that a professional has special knowledge or skillsets, none of them mentioned ethics and public interest. According to the Australian Council of Professions, a profession is defined as “a disciplined group of individuals who adhere to ethical standards and who hold themselves out as, and are accepted by the public as possessing special knowledge and skills in a widely recognized body of learning derived from research, education and training at a high level, and who are prepared to apply this knowledge and exercise these skills in the interest of others. It is inherent in the definition of a profession that a code of ethics governs the activities of each profession. Such codes require behaviour and practice beyond the personal moral obligations of an individual...” Accounting is one such profession, which exists for a meaningful social purpose. Accountants play a vital role in the market economy by gathering and presenting financial information in a true and fair manner to facilitate informed internal and external business and investment decisions. Capital markets would cease to function otherwise. Public trust is the foundation of a profession. For centuries, the accounting professionals commanded a very high degree of public trust and was rarely challenged on how we conducted our business. Our opinions were taken at their face value. A series of events since the turn of the century however has significantly undermined the level of public trust and has caused lasting consequences to the global accounting profession. The Enron and Waste Management cases in the United States have damaged the credibility of the auditing profession with society bearing higher overall costs as a result. The Public Company Accounting Oversight Board, set up in the wake of such scandals, costs taxpayers millions every year for it to monitor and regulate the work done by auditors in public companies. Additional ethics rules are introduced to limit non-audit services that auditors can provide, forcing audit clients to turn to other service providers for significant consulting engagements thus increasing costs. What happened in the U.S. caused a reassessment of the audit relationship around the world resulting in the introduction of mandatory auditor rotation in some jurisdictions.