Is it the Professional Duty of the Accountant to expose Corruption?
Author:
John Gruner
[Full text] John Gruner is Director General of the International Federation of Accountants (IFAC). Here he argues that the time has come for Chartered Accountants to lead an international public debate on dealing with corruption.
Recently, I attended a meeting with a group of accountants. When the discussion leader asked us "Do you think it is the professional duty of the accountant to expose corruption?" I raised my hand in the affirmative. It seemed like a natural reaction and I think that the general public would assume that this is what accountants do. After all, we are often thought of as "public watchdogs." Yet, I was in the minority in that group. Various qualifying statements were made and one participant even claimed that the question was unfairly placed. It seemed that many of the participants were uneasy at being asked the question.
We are going to have to face up to the question however, because anti-corruption is very much in the news. Just recently, Transparency In-ternational released its rankings of corrupt countries. Other organisations which have spoken out against corruption include the OECD, the World Bank, and the UN. Such developments oblige us to ask what should be expected of the accountants. Yet too often, the profession is unable to state exactly what its role is, most likely because it has trouble defining the parameters of confidentiality.
Exposure of corruption to the public is a valuable weapon in the arsenal and accountants should be relied on to use this weapon. We do have some guidance on this subject, but it deals mostly with how to treat internal situations within the organization, when the real issue is exposing corruption outside the organization. And it is here that the issue of confidentiality collides with the concept of the public's right to know.
Confidentiality
Confidentiality is a hallmark of the accountancy profession and virtually all of our ethical codes stress its importance. Accountants have key roles within organizations and have access to the most sensitive financial (and often, non-financial) information. Whether serving a client as a public practitioner or in an employer / employee relationship, the need for trust is paramount. Any unnecessary breaking of this trust can have serious repercussions. Yet, confidentiality is not absolute. There are situations where legal or professional re-quirements may override that responsibility - for example where the accountant may be obliged to report findings and even suspicions to some particular regulatory or other office.
Protecting Accountants
There is a further issue which relates to the kind of legal and governance frameworks that exist to protect accountants. Accountants who expose corruption can suffer such untoward consequences as legal problems, loss of job, loss of client, loss of reputation, and perhaps, in the most extreme circumstances, loss of life. Accountants are quite naturally reluctant to speak out in the absence of some type of structure to protect them in such circumstances.
Definitions
What constitutes corruption? Bribery and illegal payments are probably what we think of first when we talk about corruption, but it can go much further. Tax evasion, money-laundering, drug trafficking and various other activities fall under the corruption umbrella. Transparency International has defined corruption as "the abuse of public power for private gain." Accountants would like to see a more precise definition.
Given these uncertainties, it is understandable that accountants might not readily think it is their professional duty to expose corruption. But understanding the reluctance does not address the question of professional duty - and we have to answer that question. Accountants need to change their mindset. Rather than emphasize the uncertainties and expect society to put the necessary structures in place, we should speak out more on the issue. Accountants are trusted business advisers with particular expertise in how organizations control and report their operations. If corruption exists in an organization, an accountant is often the one who senses it. Reporting it, first internally, but also externally if necessary, should be part of the job.
Engaging others
To design all the rules necessary to make this part of the accountantâ??s duty will require the profession to involve others in society. We must be more forceful in engaging others in the debate. Rather than shying away from the subject, we must confront it, clearly setting out why we need this debate. We can ensure that regulators, governments, the legal profession and the myriad others who must be part of the structure are working with us. Simply put, we should be leading the debate. IFAC hopes to issue a paper offering some leadership in this area shortly.
Leadership is rarely easy but we have an advantage in that the climate is ripe as we approach the 21st century. Corruption is acknowledged as an enemy of economic development. I have always believed that the accountancy profession, which has a significant contribution to make, is too often ignored. We must change that. If we do, we should find that the uncertainties which make us uneasy about the subject of corruption are put to rest.
I still believe that it is the professional duty of the accountant to report corruption. What we need now is international leadership from the profession to enable all accountants to believe the same thing without hesitation - and for the public to expect nothing less of us.
Accountancy Ireland Vol 31 No 3 June 1999