Ethical Responsibility and the Professional Accountant


Way back in 1494, Fra Luca Pacioli, the Italian Franciscan friar who published the first description of the double-entry system, also wrote about accounting ethics claiming that they were based on business and human ethics and the study of moral values and judgments.

Unfortunately, in recent years we have seen a number of financial scandals being uncovered around the world. Many public figures, perceived as role models, were embroiled in financial wrongdoing. Moreover, the world continues to witness a decline in moral values mainly instigated by greed. The biblical story of Sodom and Gomorrah comes to mind, where not even ten righteous people could be found to save these two cities, though perhaps that would be taking the matter to the extreme. Unfortunately, however, all these failures start to instil doubts about the effectiveness and reliability of financial reporting and the underlying financial standards.

The positive thing is that as a result of the above wrongdoings, the question of ethics and good corporate governance started to be given more importance, and the role of the accountant as the main example and guardian of good financial ethics is becoming more significant.

The fundamental principles of ethics for accountants can be found in all the handbooks of the major accountancy bodies and are basically the following:

  • Integrity
  • Objectivity
  • Confidentiality
  • Professional behaviour
  • Competence and due care

In the following paragraphs we will look at each principle and dwell upon certain practical issues that many accountants face during their daily working life:


Accountants are expected to be persons of strong principles and high moral values for whom honesty and integrity always come first. Indeed an accountant whose integrity is put in doubt can consider himself a write-off in our profession since it is a sine qua non characteristic.

In their daily routine accountants should lead by example and practice what they preach so that their staff and colleagues may follow in their footsteps. This level of integrity needs to be applied consistently, fairly, and equitably irrespective of the race, sex, nationality, religion or any affiliation of the person concerned. Judgements should not be affected by undue pressures from influential people nor by bribes or favours.

The most important feature of integrity is that the accountant can always walk with his head held high and that he does not feel afraid or intimidated in passing judgement or expressing opinions. Moreover he should not be scared to stand up and be counted whenever necessary even when nobody else finds the courage to speak up.


This principle can be put to test by subjective and strong opinions expressed by people occupying high positions. On their part, accountants need to reach their own conclusions free of any bias, even at the cost of going against the currents of public opinion.

Accountants should not rush in reaching their conclusions and they need to reflect carefully and evaluate both sides of the coin. People can be looking at things from a totally different perspective and still bring up seemingly valid arguments. This is in fact seen in many politicians who sing the praises of one side and demonise the other. Actually, counter-arguments to biased positions need to be built up with patience and be carefully articulated so that the accountant can put himself in a strong position to win the argument without giving rise to unnecessary aggravation. This would enhance his reputation of being fair, strong, but yet objective.

It is a well-known fact that whereas entrepreneurs tend to be generally over optimistic in justifying their ambitions and projects, accountants tend to be over cautious in the knowledge that an error in being overly optimistic can cost dearly. At the end of the day accountants need to call a spade a spade and yet demonstrate that there is no hidden agenda against anyone or anything. The ultimate respect for the accountant is gained through the adoption of a balanced and fair approach.


One of the most sensitive areas where an accountant has to show the highest degree of ethical behaviour and discretion is with insider information. This matter acquires a higher significance in the case of public companies. The accountant has to be the main guardian of sensitive financial information and he therefore needs to prepare, circulate and explain the appropriate guidelines so that whoever is exposed to such information fully understands the relative importance and implications.

Another sensitive issue is that relating to remuneration packages where leakages of information can disrupt a harmonious organisation and give rise to jealousies, piques and resignations.

Price negotiations with suppliers and contractors submitting tenders for projects can induce these parties to offer various kinds of bribes and sweeteners and the accountant needs to be very vigilant for any sign of such illicit behaviour. Other areas where confidentiality is crucial are trade secrets, intellectual property, distribution lists and employee details, all of which are also vulnerable to these kinds of situations.

Professional behaviour

Many a time the accountant is assumed to be the dull and nerdish type. While an accountant should always use good manners and etiquette he should also strive to be an interesting person with a pleasant and outgoing personality that belies this stigma. Such a disposition would help him integrate much easier with other members of the organisation and not be labelled the traditional ‘wet blanket’ or ‘Mr No’.

Certain situations make it hard for the accountant to retain a professional behaviour. Living a life filled with deadlines compounded by an ever-changing regulatory environment, the accountant’s resilience is tested to the limits. It is however important that in such situations he remains calm and composed since otherwise he could transmit the wrong signals down the line.

Professional behaviour is also expected from an accountant in meeting prescribed deadlines, providing advice, compiling reports, and extending his co-operation whenever necessary. An accountant can win the crowd by delivering whatever he promises on time while at the same time consistently exceeding expectations. This is a characteristic found in many accountants and it is important that it is nurtured on an ongoing basis.

The accountant should never try to be a prima donna. On the contrary, he needs to remain humble yet persuasive and assertive. These latter characteristics are not easy to develop especially since most accountants do not receive the appropriate training. Natural aptitudes and experience can help but accountants should be trained to express their views and conclusions in a confident, articulate and convincing manner, particularly when dealing with directors who are normally much more experienced in this area.

Competence and due care

This is an area in which most employers and clients expect the accountant to be always on top of the situation, knowing everything about his profession including the myriad new technical pronouncements, regulations and compliance obligations being dished out on a regular basis. Since the vast majority of people are averse to financial information, reports, and obligations including tax, many a time they leave it up to the accountant to handle such situations for them.

In view of this level of trust placed in them it is important for the accountant to always stay abreast of developments in the accountancy world so that he can alert his clients about the consequential challenges or opportunities that are bound to arise.

In a world that is continuously changing and in which an incident in any part of the world can change the ball game in an instant, it is very important that business entities stay abreast of such developments and their potential impact so that they can react to them quickly.

The same applies to feasibility studies for new products, projects etc., for which substantial amounts of funds are allocated. These funds can go up in smoke unless the appropriate studies are undertaken in a realistic manner backed up by alternative scenarios to test their sensitivity.

As stated above, many people, including business directors do not relish the idea of reading and even less studying financial reports. The accountant should therefore ensure that he presents his reports in a way that they are easy to follow and understand. Much of this depends on the clarity of the ideas, the way they are expressed and the attractiveness of the wrapper in which they are presented.

Good corporate governance involves adherence to the various legal and statutory provisions and many organisations look upon the accountant to act as the conscience and the champion of compliance that allows directors to sleep well at night without worrying that that one fine day they might find themselves in trouble with the law.

Other considerations

  • Upholding ethical behaviour can come at a cost. Sticking out one’s neck and going against the current has its risks.
  • For most non-financial people it is somewhat difficult to appreciate the accountant’s work. The main reasons are the very limited knowledge of this area and the fact that most of the accountant’s work is of an intangible nature and lacks visibility.
  • One of the redeeming factors of being an accountant is that most people do tend to look up to us for advice and inspiration. Sometimes this only happens when and if things start going wrong but such situations serve as eye openers for the future.
  • Accountants need to be shining examples of fairness and correctness and pillars of strength in difficult situations. Through ethical behaviour accountants build trust and long-term relationships with the community.
  • A responsibility that each of us carries is that our personal professional success or failure can condition the perception of the general public vis-à-vis the whole profession.

Epitomising Ethics in Accounting

“When people need a doctor, a lawyer, or a certified public accountant, they seek someone whom they can trust to do a good job – not for himself, but for them.

They have to trust him, since they cannot appraise the quality of his ‘product’. To trust him they must believe that he is competent, and that his primary motive is to help them”

John L. Carey, describing ethics in accounting

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