The accounting profession has at the heart of its ethical standards the notion of serving the public interest. However, little or no effort is put into holding it to account by politicians who fail to ask the professional bodies and the largest firms in the land how they satisfy that requirement.
No periodic inquiry or hearing is conducted by the Commonwealth Parliament, for example, to quiz the professional accounting bodies or the major accounting firms about how they enforce the public interest in their day-to-day work.
It is left largely to self-regulation, but whether self-regulation is sufficient in the context of the accounting world merits further consideration following evidence given before a New South Wales Parliament committee hearing by a former KPMG partner, Brendan Lyon, about his resignation from the firm when he was pressured to modify to suit a client’s wishes the contents of a consulting report.
Lyon’s evidence is unique insofar as it is a rare appearance before a parliamentary committee by somebody that worked in a professional services firm providing insight into a specific transaction or case study.
It ought to prompt a broader consideration as to why the accounting profession — involved as it is in important regulatory and compliance matters across the board — does not get quizzed more often by parliamentarians.
The inquiry conducted not so long ago by the Parliamentary Joint Committee on Corporations and Financial Services on the regulation of auditing in Australia is an example of a periodic dip of the toe in the subject matter of accounting, but that is not adequate given that the profession has members within it that hold statutory registrations that go beyond the sphere of auditing and assurance.
Consider the fact that the professional accounting bodies have members that are registered tax agents, registered company auditors, auditors of self-managed superannuation funds, liquidators, and holders of financial services licenses or credit licenses — to name several areas in which accounting professionals work.
What do the accounting bodies do in relation to the provision of training as well as ensuring their members fulfill professional development obligations for both the regulators as well as the professional bodies themselves? How do they discipline members their disciplinary committee finds have conducted themselves unethically?
These registrations are established under various laws and it is entirely appropriate for the professional bodies to present themselves to inform a parliamentary committee about the steps they take to regulate and monitor their members in the public interest.
The accounting bodies themselves are recognised in legislation and members of the more prominent bodies are able to sign statutory declarations and other documents if they hold the appropriate membership status.
This recognition is seldom reviewed once granted under law or regulation and the legislators should periodically “check in” to understand what the bodies are doing when it comes to regulating their members and protecting consumers.
It is time for elected representatives to ask the professional bodies and the various firms what they do in the public interest because — if nothing else — it will create a heightened awareness that those that give them recognition under law are set to hold their feet to the fire if they show a sign of being lax.
Says much about the ethics of KPMG and the senior partners
Why would a corrupt, inept and secretive government that has trashed all notions of accountability and ethics require professional firms to be any more ethical than the federal government?
It’s pretty easy to see how the bodies discipline their members; they all publish their disciplinary outcomes on their websites. The TPB also disciplines tax agents, the CADB and ASIC disciplines auditors, ASIC disciplines SMSF auditors and liquidators etc. It’s easy to find out what the bodies do in terms of the provision of training (one can check their websites and check the listings of their courses and seminars). CPD is audited regularly by the bodies for compliance, as noted on the bodies’ websites.
None of this information is all that difficult to find. Any inquiry into the profession should be targeted and not just asking questions to which we already know the answers.
The accounting bodies receive recognition in legislation and – unlike their members that are registered – they are not required to submit to any ongoing process. You are right. There are various processes in place but this does not mean that the bodies should be given recognition and not held accountable by the parliaments that facilitate that. In my time working for two professional organisations in the accounting space there was no inquiry for which I prepared briefings that ever looked at the bodies and how they dealt with the public interest.
The recent inquiry into audit regulation was an interesting exercise but it did not recommend ongoing monitoring by a parliamentary committee. That might be once or twice during the life of a parliament but something ought to be in place especially since the professional bodies develop through their own ethical standard setter extra legal guidance that effectively becomes delegated legislation.
Fair fair. I have misunderstood the thesis of your article. Thanks for the clarification.
There is one especially notable mechanism by which the accounting bodies themselves are regulated, and that’s through the Professional Standards Schemes which provide their members in public practice with limited liability. The most notable operation of this lever in recent times was when CPA Australia members lost their limited liability protection over the CPA Advice matter and were then on the hook for significantly higher exposure for malpractice. But it would be appropriate for Parliament to look at this and see whether this mechanism is actually doing its job.
The CPA Advice scenario was one that had a range of people reflecting on the purpose of a professional body as well and reflection on that issue is critical.
“Ethics” is that little county in England that produces all those good cricketers.
TOWIE!
Again why we need an ICAC that covers ALL Governments and ALL Government contracts/ers. ie the Contractors have the same rules applying to them with respect to Government contracts.
Mandatory jail terms would help to shake them up.