Wui San Kwok, a practitioner member of the International Ethics Standards Board for Accountants and a partner at PricewaterhouseCoopers, shared his insights in this interview on how the public perception of the accounting profession hinges on trust, and the different pressures and challenges faced by accountants in acting ethically.
He is deputy chair of IESBA, also known as the Ethics Board, which operates under the auspices of the International Federation of Accountants. San Kwok has been a practitioner member of IESBA since 2010 and served as interim chair of IESBA from March 2014 to December 2014. He also chairs the Institute of Singapore Chartered Accountants’ Ethics Committee. He has been with PwC since 1992 and is currently a partner and regulatory advisory leader in Singapore. Alexandra Waibel, a manager at the International Federation of Accountants, interviewed him for this story:
What made you interested in serving on the Ethics Board?
I didn't volunteer. I didn’t know what the IESBA was then. I run a consulting unit in my firm. Ethics standards-setting is far removed from what I do day to day.
It began when a retiring IESBA member was looking for a successor. He is Irish and very supportive of geographical diversity at IESBA. He said half-jokingly, “The IESBA needs an Asian but also to continue the Irish heritage.” He knew that I had spent about 10 years in Northern Ireland. He was rather persuasive.
So I took this up, and am so glad I did. It's been a journey of personal learnings—tremendously interesting and challenging, as a member and then Interim Chair—that I won’t ever forget.
What particular perspectives or experiences do you bring to the board?
As a consultant, probably big picture and pragmatism.
The IESBA deals with so many things. We must, however, always keep sight of the big picture. We can't pursue idealism to solve complex problems in what is an imperfect world. A good Code has to be operable in the real world. It must be balanced and proportionate. Conversely, one cannot constantly get hung up on the status quo. We must be keenly aware of issues of significant public interests, and unavoidable winds of change. We must know when to let go and move on.
What is the most challenging part of setting international ethics standards?
Interesting question. It doesn’t matter which culture you come from. Good ethical principles are universal. I doubt you need to be convinced that you ought to be honest, behave professionally and with due care, and so on.
Therefore, the challenge is not defining acceptable ethical principles, but rather defining the acceptable practices to meet those principles, and that is where people having widely differing opinions. These are often influenced by culture, changes in societal expectations, and even politics.
For example, people argue day and night about where to draw the line on gifts and entertainment, what services auditors may provide to audit clients, and so on.
Hence, if you ask me, the often long and arduous process of bringing consensus and in determining where to draw those lines has to be the most challenging aspect of standard setting. We are striving for global convergence. Challenging, but so satisfying when we get it done. And right.
A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest. What does this mean to you?
I will leave public interest for another day. Otherwise, we’ll be here for a very long time!
For now, I would say trust and relevance. Our existence and importance to the public is linked very closely to us being a trusted profession, and doing things that are most relevant to our stakeholders. These two words guide me whenever I think about an issue concerning the public interest.
They are mutually exclusive. We can deliver relevant work of outstanding quality, but if the public does not trust our output, we fail. And, once trust is lost, it's very difficult to regain it.
Similarly, we can be completely trusted, but if we do not do the things that are the most relevant to our stakeholders, we will have a problem. We will become irrelevant in time, and fail.
We serve many unique public interest roles, and trust is central to all of these. Many of these are with captive audiences. Eyes are always on our actions. So we must continue to proactively self-regulate and self-innovate to preserve public trust and relevance in what we do. We must anticipate emerging areas of significant interest to our stakeholders, including changing needs and expectations. We must manage them ahead of time.
What pressures or challenges do accounting professionals face today in terms of acting ethically?
Not easy to answer. The profession is diverse: SMPs and large firms; professionals in business, in government and public practice; varied businesses and job roles. They face very different challenges.
For now, I think the one common challenge many will not dispute is managing the fast and significant, sometimes unclear, changes in ethical standards and expectations: reporting suspected illegal acts; independence requirements; conflicts of interest; public and regulator expectations, such as tax morality; dealing with complex jurisdictional differences.
Many forget that there is often a human face to all of this. These issues can impact personal lives. Families are involved. Ethical requirements can have consequences on opportunities and priorities. These challenges and pressures can impact talent attraction and retention to particular fields, such as auditing.
The human face behind SMPs is also worth mentioning. The pressures and challenges arising from changes in standards can be immense. Let’s be real. These are businesses, and people’s livelihoods are concerned. One can’t, for example, expect a change in a business model, or diversification of client portfolios and revenue, overnight. The market structure may also make it more challenging for change to take place.
What do you see as the key factors influencing the development of global ethics standards in the future?
Two areas are worth mentioning: more and better research is one. This includes the assessment of incremental benefits to the public interest and the trade-offs of policy change. I feel that sometimes, we are having to make important decisions that have widespread implications based on perception. Like the principles of good regulation, evidenced-based standards are always more credible and persuasive in gaining acceptance.
Secondly, I would like to see better understanding and collaboration between the profession and regulators in standard setting at the global level. I still sense distance, and possibly some distrust, too. We need to work on that. Standard setters and regulators are equally important stakeholders in this process. Though differences in views will arise, in the end, both are on the same side.
The world badly needs convergence to a common global ethical code, not more divergence. The IESBA has and must continue to occupy this leadership position. I retire in December 2015 and will be watching the progress of the IESBA with high expectations.
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