ACCA finds need for improved ethics in digital age
The Association of Chartered Certified Accountants has released a new survey raising questions about how accountants and businesses around the world are dealing with ethical challenges prompted by various technology trends.
Ethics was considered a “very important” skill in the digital age by 77 percent of the respondents, with more than nine out of 10 giving ethics a top rating. An above-average proportion of respondents in the nonprofit and public sectors indicated they considered ethics as “very important” in the digital age. Nearly two-thirds of the respondents called for strong ethical leadership, while a 54 percent majority called for guidance on a new code of ethics for the digital age.
However, about one out of five respondents admitted they had personally felt pressure to compromise their ethical principles over the past 12 months. The most commonly compromised principle they cited was integrity, specifically “being straightforward and honest in all professional and business relationships.”
“The professional accountants of the future will need, in addition to technical capability, a rounded skill-set that demonstrates key quotients for success in areas such as experience, intelligence, creativity, digital skills, emotional intelligence and vision, and at the heart of these lies the ethical quotient,” said ACCA head of USA Warner Johnston in a statement.
In the U.S., 90 percent of the survey respondents said strong ethical principles and behavior will become more important in the digital age (globally, the figure was 89 percent). Ninety-four percent of those surveyed in the U.S. said ethical behavior helps to build trust in the digital age (globally, the figure was 93 percent). Eighty-nine percent of the U.S. respondents said they believe professional accountants act in the public interest (globally, the proportion was 78 percent). In addition, 92 percent of those surveyed in the U.S. indicated they felt that professional accountants upholding their code contributes to organizations’ abilities to uphold ethics (globally, the figure was 80 percent). Meanwhile, 99 percent indicated that principles from the International Ethics Standards Board of Accountants, or IESBA, still apply and remain relevant in the digital age (globally, the proportion was 94 percent).
“Professional accountants are often on the front line of facing ethical questions in business,” said ACCA director of professional insights Maggie McGhee in a statement. “What is clear is that the digital age creates new dilemmas where there are no easy answers. If you’re working in a business considering whether to start accepting bitcoin payments, or implementing cloud-based customer records, these are crucial questions. In the digital age, there needs to be more—not less— importance placed on the ethical and professional judgment of individuals.”
Of the more than 10,000 people who completed the survey, approximately 40 percent were ACCA members, 55 percent were ACCA students, 5 percent were members/students of other professional accounting organizations, and another 500 were C-suite executives who interact with accountants in their organizations.
For the report, ACCA also asked several experts about topics such as cybersecurity, ransomware attacks, cryptocurrency and distributed ledgers, intellectual property disputes, customer privacy, platform-based business models, big data and analytics, automation, artificial intelligence and machine learning, and procurement of technology solutions.
In terms of dealing with data breaches and ransomware attacks, the report noted, “Whether or not the ransom is eventually paid, it is important that communications about the data loss are clear, controlled and transparent. The impression that facts are being suppressed is damaging. In many cases, it may be necessary to make affected customers aware as soon as possible that their data has been compromised. The accountant may need to advise management on these issues.”
“Professional accountants have an obligation to act in the public interest,” said IESBA technical director Ken Siong in the report. “If there was a data breach, they should endeavor to inform the end user, the customer or the client, at the earliest opportunity and let them know that their confidential information has been exposed... [rather than] seeking to protect the interests or reputation of the organization.”
In dealing with bitcoin and other cryptocurrencies, the report noted, “Given that bitcoin use is an evolving trend the accountant can help to prevent problems by maintaining an awareness of market sentiment and the opinion of bitcoin experts. It will be useful to stay alert to the likelihood of significant changes in public perception that could cause reputational impact.” It pointed out that internal auditors have a responsibility for ensuring they are clear in communicating the risks and organizational implications of using bitcoin. The report acknowledged concerns about whether bitcoins could be used for money laundering, but added that it’s not clear how valid these claims are and the kind of impact the use of bitcoins could have on the brand and operational risk profile of the company.
“Perhaps the most interesting ethical dilemma in cryptocurrencies, so far as designers and promoters are concerned, is the conflict between use as a medium-of-exchange and as a store-of-value,” said Michael Mainelli, executive chairman of the Z/Yen Group,” a commercial think-tank, consultancy and venture firm headquartered in London. “High price volatility indicates a poor store-of-value. The more speculation in a cryptocurrency, the worse it acts as a currency. For money launderers, if it’s high-volatility you want to go through the cryptocurrency; if it’s a good store-of-value you want to go into the cryptocurrency. Money as a technology depends on belief in the future existence of a community trading debts in its currency. So, paradoxically, money launderers leaving their proceeds in the cryptocurrency may indicate that it’s maturing as a medium-of-exchange and a store-of-value.”
Accountants can help guide the ethics at businesses dealing with various technologies. “In many organizations, the accountant may probably be the only person that is a member of a professional body and thus bound by ethical principles imposed by that professional body,” said Ernst & Young assurance partner Tee Wee Hiang Bing. “And therefore, the accountant is expected to always act ethically and in the best interest of the public.”