How COVID challenges our professional ethics
December 3, 2020
By Liza Robbins.
Your team is preparing the accounts for a company that is struggling during COVID…
…And their CEO is pressuring them to sign off documents with which they are not completely comfortable.
They can sense that he’s desperate. His company is going through a very rough time, and its future hangs in the balance.
The problem is, it’s difficult to confront him over Zoom.
And because your entire firm is still working remotely, your team members are finding it difficult to confide with you about their doubts.
They sign off on the accounts.
A recent survey shows that 20% of ACCA and Institute of Management Accountants members have encountered a situation where ethics were at risk of compromise, as a result of COVID-19.
According to the same survey, a quarter of issues related in some way to the use of technology.
Why that’s the case, what types of challenges are most common, and what do to about them was the subject of a fascinating ACCA podcast this week. (You can access the podcast once registered – you’ll find it under the December 1 sessions.)
Robert Holland, audit partner at James Cowper Kreston in the in UK and chair of Kreston International’s Audit Quality Group, was one of the panellists. I caught up with him to find out more.
He told me that pandemic has raised the risk of ethical pitfalls for accountancy firms.
Initially there was an issue of time pressure, he told me.
“There was a risk of people making poor decisions, because they had to get things out quickly. That always exists, but it was exacerbated in the early days of the pandemic.”
And with the situation still changing so rapidly in some countries, and pressures on cash flow and profitability so high, this can still be a challenge.
A more ongoing issue is working remotely.
“When something doesn’t feel quite right, it’s much easier to mention it to a colleague if you’re standing next to them by the water cooler,” he says.
“Whereas if you’re working remotely, you have to make a call to someone to raise concerns. And that can be more uncomfortable and difficult.”
It’s also harder to maintain a healthy sense of professional scepticism when you’re working remotely – particularly for less experienced team members.
“You have to be more sceptical than ever when talking to people over video conference. But it’s so hard to read people that way! And definitely harder to confront them, especially if you have a well-established relationship.
“The accounting world is littered with scandals from the past 10, 20 or 30 years, where someone gave someone else the benefit of the doubt. That’s the increased risk here.”
A recent paper by ACCA, “Ethics in a COVID-19 World,” highlights other challenges that might arise.
Amongst other scenarios, it covers the increased risk of data theft when staff are working from home…
Pressure to increase the scope of your work beyond your competence by companies in dire straits…
And how you can be left exposed when furloughing or dismissing some of your staff, leaving you with fewer resources – and a less experienced team – than before.
Worst of all, after months of working remotely, practices which open you up to ethical compromise can become embedded in your organisation.
So do we need to come up with new ethical guidelines for a COVID-19 world, I asked Robert?
He thought not.
“We have good guidelines and excellent general principles. We just have to apply them to this particular set of circumstances.”
The key, he says, is to stay very aware of the ethical challenges you might come across.
“The continued reminders from training are essential. This is about developing the right state-of-mind and attitude.”
He recognises that “being brave” when in a difficult ethical situation is easier for senior staff than for junior staff. That’s where regulations come in – “and COVID is a good test to see how robust they are.”
He covered all this and much more on ACCA’s podcast, together with Ken Siong, Senior Technical Director at International Ethics Standards Board for Accountants (IESBA), who addressed the regulatory side.
I strongly recommend you have a listen to their lively exchange.
Just click here to access the podcast right now. (You’ll find it under the December 1 sessions.)