Trust. It's a little word with big implications. For professional service organisations, trust is the backbone of any decent business model.

Within the accounting sector, the appropriate management of highly sensitive personal and corporate information, typically of a financial or strategic nature, is critical. The industry has responded well to this responsibility. Much has been written recently about the obligations that professional services firms have to data privacy, and quite rightly; the issue remains a hot topic. That said, there are other standards of equal importance, which, if compromised, can cause considerable fall-out: financial, reputational or both.

Ethical standards

The maintenance of professional ethical standards is paramount to trust; obviously it is imperative that the practitioner has the requisite skills and experience to complete the accounting services appropriately.

ACCA has published its own ethical guidelines under The ACCA Code of Ethics and Conduct which is binding on all its members and students as well as on every partner and director in an ACCA practice. Based on the International Ethics Standards Board for Accountants Code, these principles revolve around professional ethics, namely:

  • professional competence and care
  • confidentiality and
  • professional behaviour.

Sitting alongside these professional ethics are personal ethics - a moral code backed by:

  • integrity and
  • objectivity.

It is these five tenets which form the fundamental principles within the ACCA Code of Ethics and Conduct.

But do ethics go further than these five principles? By definition they must do. They are not rules but principles, and therefore in order to navigate them, it is necessary to apply one's own ethical interpretation. This involves an assessment of what is required to adhere to these principles and 'do the right thing' – easier said than done bearing in mind that we all think differently based upon our diverse backgrounds, cultures and values.

Using a field of study known as 'normative ethics', the quest amongst professional regulatory bodies has been to provide a framework to guide us as we negotiate ethical dilemmas to ensure compliance with the five principles.

This 'conceptual framework' as it applies to accountants is set out in the ACCA Rulebook.

It comprises an analysis of the following:

  • what are the relevant facts?
  • what are the ethical issues involved?
  • which fundamental principles are threatened?
  • do internal procedures exist that mitigate the threats?
  • what are the alternative courses of action?

By referring back to these questions, practitioners will maximise adherence to the principles. Adopting this approach is vital to maintaining public confidence.

Corporate governance standards

As well as ethical standards, corporate governance is a critical factor within the accounting sector and a factor which has a huge bearing on a business's trust and integrity. Best described as organisational effectiveness for the satisfaction of stakeholders, corporate governance is a framework that steers a business towards its vision.

Within the accountancy sector, stakeholders will be wide and varied, including partners and shareholders, clients, investors, financiers, suppliers, and the government.

These stakeholders have varying interests but will all have similar goals: good corporate performance, improved business functions and competitiveness. Part of that involves the adherence to standards and regulations which, for the accounting profession, are considerable.

The Financial Reporting Council in the UK sets the corporate governance, stewardship codes and UK standards for accounting and actuarial work. The code has developed extensively since the first UK Corporate Governance Code was published in 1992. It now extends to the following aspects of leadership, in part necessitated by the financial crises and high-profile mismanagement /misconduct examples:

  • board leadership and company purpose
  • division of responsibilities
  • composition, succession and evaluation
  • audit, risk and internal control, and
  • remuneration.

Not only do accountants have a role to play within the operation and stewardship of their own practices, but they are at the forefront of helping others meet their own corporate governance standards. Accurate accounting is a crucial cornerstone in helping all businesses meet strict corporate standards, codes of conduct and regulations.

Why is this important?

The idea that trust is important is hardly ground-breaking. However, in this digital world where much of our life is spent online, negotiating fake news, false information, cyber threats, self-aggrandising Facebook feeds, and Instagram filters, there is a increasing tide towards truth, integrity and transparency. Concepts such as social responsibility, fair and responsible behaviour, and loyalty are having a resurgence as we look to hold onto that which is decent.

The importance of trust and integrity within the business world should not be underestimated.

Failure to operate any business with the appropriate level of integrity has repercussions, of course. The implications are considerably greater when the failures go to the very heart of a business's values and the economic consequences of breached trust and integrity are miscalculated at a professional service firm's peril. Time, money and resources squandered on the defence of legal claims by disgruntled third parties is best avoided. Whilst insurance might go some way towards redressing financial losses, the long-term reputational scars may not be remedied so easily.