Unethical behaviour encountered by 94% of accountants

The vast majority of accountants in Ireland say they have experienced some form of unethical behaviour, with dishonesty the most commonly cited example, a new report has found.

Industry research into ethical standards in the profession found 94 per cent of typical accountants had either “observed or encountered” some level of concerning behaviour during their career.

The use of undue pressure or influence was the second most commonly cited issue (74 per cent), while others in the top six included unethical human resources practice, bullying and harassment, and the misrepresentation or manipulation of information.

Accountants “can be exposed to unethical issues that go beyond the realm of financial reporting, auditing or any other accountancy-related activity,” it noted.

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The study was commissioned by Chartered Accounts Ireland Education Trust and compiled by independent researchers Dr Eleanor O'Higgins and Matt Kavanagh.

It drew on a survey of 2,137 practitioners taken last year, as well as from interviews and focus groups.

Its remit was to “gain insight into ethical awareness, challenges and concerns” facing the profession.

Range of experiences

By the end of 2017 there were over 38,000 practising accountants in Ireland; the document portrays a range of experiences and attitudes toward ethics.

It found accountants generally believe their organisations to be highly ethical – some even consider the issue of unethical conduct to be overstated.

However, another identified belief is that the reputation of professional accountancy bodies was “tarnished by their response to the unethical behaviour of members in the lead-up to the most recent financial crises”, including the lack of visible disciplinary action.

In an interview contained in the report, Kevin Prendergast, chief executive of the Irish Auditing & Accounting Supervisory Authority (IAASA), described the area of regulation as a "pendulum".

Respondents from smaller practices said their clients were more likely to ask them to bend the rules

"If you go back to when ODCE [Office of the Director of Corporate Enforcement] and IAASA were being set up, the pendulum was swinging toward 'something must be done'," he said.

“Then, as we entered the mid-2000s, the pendulum had swung back toward lighter-touch regulation. At the moment, I think regulation in our area is relatively robust.”

Treated more harshly

The report uncovered a perception that smaller firms are often treated more harshly than larger counterparts in terms of enforcement and compliance.

About 55 per cent of accountants have never consulted the professional code of ethics. Respondents from smaller practices said their clients were more likely to ask them to bend the rules, although they insisted this did not happen, no matter how “hungry for business” they might be.

Smaller practices are also more likely to consult their professional bodies on ethics matters.

A number of respondents said there is a need for “increased evidence of action taken against members acting unethically” and “to ensure that these actions [associated with recent banking crises] are properly investigated”. Greater sanctions are also required for ethical breaches, some said.

Among various recommendations, the authors suggest the promotion of existing supports such as helplines that can counter “isolation or groupthink”. Mandatory ethics components to continuous professional development could also be considered, it said.