Tuesday, September 19 2017

VietNamNews

Ethics a professional imperative

Update: May, 14/2015 - 09:35

Investors and other stakeholders expect that accountancy services, including auditing or assurance, can be relied on when taking important decisions, David Stevens, Integrity and Law Manager for the Institute of Charted Accountants of England and Wales (ICAEW), tells Viet Nam News.

David Stevens

How do you evaluate the role of accountancy and related professions in safeguarding ethical business practices?

As professionals there is an expectation placed upon us that we should relegate self-interest in favour of providing a high standard of service and not associate ourselves with deceit.

As a member body of the International Federation of Accountants, ICAEW members adhere to a code of ethics. This creates an expectation that our output can be trusted which is especially important when providing audit or assurance services over information that is often relied upon by multiple stakeholders but specifically investors. An accountant may wear many hats. That of a trusted business adviser, a corporate conscience, an assurance provider, a resource manager, also serving as gatekeepers to the financial system and in some cases we can be tasked with keeping the bad players out, as well as, in some jurisdictions, providing intelligence to law enforcement.

So our code of ethics is not a straight jacket that binds us, but a shield to protect ourselves, the organisations we work for and wider stakeholders. We safeguard the economy.

As Viet Nam takes its international integration further, can you comment on the transparency and accountability of financial reports in the country? How does the UK Bribery Act affect overseas business in Viet Nam?

Integration will always bring with it new challenges. In a global marketplace having consistent standards to apply is important. So having a common language like IFRS or auditing standards based on ISAs not only facilitates trade but ensures consistency, which is in itself a characteristic associated with integrity.

Our profession transcends geographic boundaries, so to be trusted on an international stage we have an element of self-regulation, which is why any developments in professional oversight and quality assurance are always exciting to see.

And since ethics is the backbone of our work, the recent World Bank recommendation of achieving harmonisation with regard to ethics is also good. The great thing about a code of ethics is that it can evolve and adapt easily, unlike a system of complex regulations or legislation. However there is a place for legislation where issues are more black and white and the consequences more severe. For example, bribery, an issue on which there have been recent developments in the UK which have an extra-territorial impact.

UK businesses operating in Viet Nam also need to meet their domestic legal requirements, including the recent UK Bribery Act, which makes it a crime for a company to offer a bribe or allow someone to offer a bribe on their behalf. Directors will have put policies and procedures in place to ensure that their company, or anyone acting on its behalf, is complying with the provisions of the act. This might include more detailed reviews of entertainment expenditure, more regular meetings with their agents, or a closer look at group policies and procedures.

Why has ICAEW invested so much time and effort in building your own code of ethics, instead of adopting existing ones?

We apply the International Ethics Standards Board for Accountants code of ethics but with some add ons, where it doesn't cover some of the work our members do. For example, in the UK, accountants are involved with insolvency work. We also include extra content to cover issues on which we have received a lot of complaints or queries; for instance, commissions and fees. Finally we include additional sections where required to by law, like audits. We aim not to introduce new add ons as we wait for the IESBA code to include expanded content. A good example here would be conflicts of interest.

Can you elaborate a bit on ICAEW's Code of Ethics?

As I indicated earlier, sometimes a rule-based approach is not the best way. Rules can be bent or loopholes found within them. They can also be slow to change and are not always grounded in practical scenarios. So our approach attempts to address that by providing a set of fundamental principles to which to adhere. These are Integrity, Objectivity, Professional competence and due care, Professional behaviour and Confidentiality.

These fundamental principles are supported in the code by practical guidance and illustrative examples.

Among those, I would say Integrity, that is to be straight-forward and honest, is undoubtedly the most important fundamental principle. But we think the concept of integrity can be taken further and this is explored in some of our thought leadership work.

The characteristics of someone with integrity include fairness, the promotion of community interests, openness, adaptability and consistency. It is sometimes not easy to the right thing, so being a person with integrity also takes courage. We also believe in installing integrity within organisations and much of our work has dealt with this idea.

I'd also like to return to a point I made earlier about professionalism. One of the hallmarks of a profession is judgment. And there is little point in spending resources training someone to exercise professional judgment if you are then to restrict that with a long list of rules.

Our members can be trusted to follow the spirit of the code rather than merely engaging with a compliance based checklist mentality.

n How can ICAEW to contribute to integrity and ethics in Vietnamese accountancy and among Vietnamese businesses?

ICAEW is very active in Viet Nam, supporting not only our members in the region but the local accountancy profession as a whole. I, along with many of my UK colleagues, are fortunate enough to be able to come to Viet Nam and deliver technical roadshows to the profession here, covering a variety of technical and ethical topics.

We are an active participant in the Viet Nam Integrated Alliance, as well as working within international bodies to help support local bodies such as VAA and VACPA, providing resource and highlight opportunities for further developmental work.

We have memorandums of understanding with VAA and VACPA, to allow for closer co-operation between our professional bodies, including in the areas of professional ethics and education.

We are also in the scoping phase of a thought leadership project planned to take place in South East Asia, and following today's ICAEW event on integrity, there was a keen interest from participants to include Viet Nam in the research. I look forward to future engagements with my fellow accountants in Viet Nam on the important topic of ethics. — VNS

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